Analysts criticise Gigaba for indecisiveness over ailing SOEs

Finance Minister Malusi Gigaba revealed that government is still planning to sell its stake in Telkom to aid ailing parastatals such as South African Airways (SAA).

FILE: Finance Minister Malusi Gigaba.  Picture: Christa Eybers/EWN

CAPE TOWN - Finance Minister Malusi Gigaba is being criticised for not being decisive enough in his vision for struggling state-owned enterprises.

Gigaba delivered his medium-term budget policy statement in Parliament on Wednesday.

He revealed that government is still planning to sell its stake in Telkom to aid ailing parastatals such as South African Airways (SAA).

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“The expenditure ceiling is threatened in the current year as a result of government’s recapitalisation of SAA and the South African Post Office.

“In that regard, the government is disposing of a portion of its Telkom shares to avoid a breach, with an option to buy them back at a later stage.”

Economists say that the time has come for government to let go of resource-draining state-owned enterprises.

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The Finance Minister did not mince his words as he described the dire state of the South African economy, with debt projected to spiral to more than R3 trillion by 2020.

Economist Lesiba Mothatha says things would look a lot better if government got rid of some of its SOEs.

“You take them out, we’re very sustainable, you take in, it creates a whole messy situation.”

Market analyst George Glynos says the time for bold action is now.

“My fear is that the government is going to be forced to sell state assets at lower prices because they would have waited too long.”

Gigaba told Parliament that they have dipped into contingency funds to rescue SAA and the Post Office but that there’s still a R3,9 billion shortfall that they will need to find somewhere.

How exactly to fix state-owned companies without having to further compromise the public purse is one of the Finance Minister's biggest challenges.

A breach in the spending ceiling is mainly due to the bailout of dysfunctional parastatals like SAA and the Post Office.

The Inkatha Freedom Party's, Narend Singh, says that Gigaba hasn't been decisive enough about his vision for struggling state-owned enterprises.

“He didn’t even utter one word about commercialising, privatizing, shutting down a number of SOEs. Government debt is just skyrocketing.”

Meanwhile, the African Christian Democratic Party's Steve Swart says that there's still too much political interference in the boards of parastatals.

“There’s definitely a problem with governance within boards, directors and the relationship between the board and the executive and understanding that in terms of the Companies Act.”

(Edited by Leeto M Khoza)