Tag: bailouts

SOE bailouts loom in South Africa

By Gaye Davis for EWN

Finance Minister Tito Mboweni said cash injections for state-owned entities like the South African Airways, the South African Broadcasting Corporation (SABC) and Denel wouldn’t be handed over all at once but in chunks, as certain conditions are met.

Mboweni was on Tuesday replying to debate on the Appropriations Bill, which was before the National Assembly.

The Appropriations Bill provides for budget allocations to all departments and entities and was tabled by Mboweni along with his February Budget.

It included provision for R3.2 billion for the cash-strapped public broadcaster.

The bailout money for the SABC, Denel and SAA would come from the contingency reserve account but Mboweni said it came with strings attached.

“We would not just make that available tomorrow, it would be a mistake but we will release in chunks as certain conditions precedent are met, to make sure there’s progress in improving the organisation.”

Mboweni said chief restructuring officers for each entity would be announced on Wednesday. They would work with the management of the SABC, SAA and Denel to get them back on track.

The minister has warned that the country’s debt to GDP ratio was at an “unacceptable level”: “Thus providing the basis for a serious crisis in the country.”

He said financial management needed to be improved across government and people needed to accept the principle of paying for the services they use.

SAA bail-outs could have bought Emirates

South Africa would have achieved a lot if it were not for its continuous bailout of state entities and state capture‚ CEO of Business Leadership SA Bonang Mohale has said.

“We have spent R50 billion on SAA since 1999. If we had not done that‚ we would have bought Emirates Airlines. We would have in 23 years at least had four CEO’s that are being head-hunted for being effective and efficient knowing how to run an award-winning airline‚” said Mohale.

He was speaking at a panel discussion on Tuesday titled ‘South Africa – Hero to Zero’‚ based on the role of business in the country’s current political climate.

Mohale said South Africans had a lot to think about and consider ahead of the ANC’s elective conference to be held later this year.

“Post December 20‚ I think we will be confronted with two challenges. The first will be a fiscal cliff where this government will run out of money at the rate that we are bailing out state-owned enterprises. Secondly‚ I think that most of us are beginning to think about an emergency economy recovery plan‚” he said.

“There is [agreement] about what we need to stop doing‚ what we need to start and continue to ensure that by the end of 2018 we would have added another 2.3 percentage point to our GDP growth because it’s about economic growth and if the economy is not growing‚ very soon we will be talking about the redistribution of poverty and not the redistribution of wealth.”

Fellow panel member former British MP Lord Peter Hain also highlighted that a lot of South Africa’s funds were not working in the country’s favour.

At one point‚ South Africa’s democratic government was spending more on education than any other developing nation but sadly‚ it was not reaping the rewards.

“School attendance doubled since the dark days of apartheid‚ yet out of 140 countries in the 2015-16 World Economic Forum’s global competitiveness index‚ South Africa was ranked at 138 for the quality of its education‚ below desperately poor‚ undeveloped states like Burundi‚ Benin and Mauritania. This is not just appalling‚ it is criminal‚” he said‚ adding that this showed problems in South Africa’s systems.

On a more positive note‚ he said the country’s problems were not unique and a bumpy road following the transition from apartheid to democracy had been expected.

“Just look at Britain today‚ the so-called mother of democracy. We are a mess with a dysfunctional prime minister‚ a divided government‚ a weak economy‚” Hain said‚ adding that Brexit was one of the biggest historical challenges the country has faced since World War II.

By Naledi Shange for Rand Daily Mail

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