State Owned Enterprises the heart of SA’s economy
January 18, 2018
Johannesburg, South Africa:Deputy President Cyril Ramaphosa says South Africa is ready for this year’s World Economic Forum (WEF) and much attention needs to be paid to State Owned Enterprises (SOE’s) as SA’s economy can only stabilise if there is stability at these entities.
Ramaphosa was speaking at a breakfast meeting in Johannesburg ahead of the departure of the South African delegation to this year’s World Economic Forum (WEF) meeting, taking place in Davos, Switzerland, from January 23 to 26, 2018.
The purpose of the breakfast meeting was to allow government and other business leaders to discuss the message they wish to take to Davos.
South Africa goes to the WEF meeting just weeks after Ramaphosa was elected leader of the governing party, the ANC, positioning him as a possible President of the country after the 2019 elections.
“The one overriding concern that people had leading up to the conference of the governing party was political uncertainty. We now have a new leadership that has been chosen that will take the country forward,” Stated Ramaphosa.
The new leadership, he said, will provide political and policy certainty at the time many South Africans are expressing doubt over the country’s growth prospect in light of increasing unemployment and rising costs of living.
“We are going to Davos to sell South Africa. We are going there to say we have a leadership that is providing political certainty and we will be telling the investors that South Africa is open to business,” he said at the meeting attended by several ministers, including Finance Minister Malusi Gigaba.
Eskom top priority
In the recent months Concerns have been raised over governance and claims of financial mismanagement issues at some state-owned companies including Eskom, Transnet and South African Airways, among others, with investors and ratings agencies displaying discomfort over how these entities are operating.
“The problems Eskom is facing are huge. The Minister of Finance is seized with this matter on an hourly basis. If there is anything that is top of mind not only for the minister but for a number of us in government, it is Eskom,” asserted Ramaphosa.
Ramaphosa said he was also concerned about a number of issues that affect SOE’s.
“We are all concerned about our own State-Owned Enterprises. There needs to be rigorous oversight. There should not be interference as to who you appoint as the gardener or the lady or gentleman who makes tea or how procurement should be done. The challenges at SOEs need to be resolved as in yesterday,” Ramaphosa said.
The Finance Minister also held a press conference in which he moved to assure investors that problems at State-Owned Enterprises, Eskom in particular, were being attended to.
“The problems at State-Owned Enterprises require immediate action because they raise a fiscal risk and we in the National Treasury are raising those risks. We are not going to wait until the end of term of this current administration to address these challenges. It’s going to be urgent,” Gigaba said.
He said despite the challenges, the economy was showing signs of recovery and resilience.
South Africa’s GDP grew by 2.0 per cent quarter on quarter in the third quarter of 2017, from upwardly revised 2.8 per cent in the second quarter.
The agricultural sector was the largest contributor with growth accelerating by 44.2 per cent and contributing 0.9 percentage points to quarter on quarter GDP growth, according to Treasury.
Manufacturing was up 4.3 per cent quarter on quarter in the third quarter and contributed a further 0.5 percentage points. Growth in the sector was mainly driven by rising production in export-oriented sectors such as petroleum, chemical products, rubber and plastic products, metal and steel.
Ramaphosa also suggested that while in Davos, South Africa would be casting its nest across the globe to attract investors and that over the next year work would focus on economic recovery and stability.
“Our most important task right now is to address the challenge of jobs, inequality and poverty and we can only address those challenges by getting our economy to recover. We have to work together to ensure there is economic recovery, government cannot do it alone nor can the private sector do it alone.
“We want to make South Africa an attractive country for investment and we must deal with those issues that stand in the way of investments flowing into our country. As we go to Davos, our message is simple and it is to increase investor confidence in our country and I believe we can do it,” said Ramaphosa.