NEWLY appointed South African finance minister, Tito Mboweni used his medium term budget policy speech today to call on government and the private sector to “demolish the walls that exist between them” in respect of state-owned companies.
In order to reconfigure state-owned companies such as Eskom, Mboweni said the government would look at how they operated. “Our current challenges with state-owned companies present an opportunity to demolish the walls that exist between the private and public sectors,” he said.
Eskom is struggling with high debt. As of March 30, it totalled R399bn of which R16bn was owed by defaulting municipalities. The group lost R2.3bn for the 2018 financial year whilst its core electricity business lost just over R4bn. Eskom recently applied for a 15% electricity tariff hike for the next three years, beginning 2019-2020 even though electricity prices have increased 350% since 2007 versus inflation of 75% over the same period.
Mboweni also called for “growth enhancing reforms” and reiterated targets identified by South African president, Cyril Ramaphosa, for changes that would encourage investment in the country. “Rebuilding confidence will unlock private sector investment,” he said.
“Investors are in it for the long run. They want to know that our policies are clear and consistent. We must stop talking in contradictory terms,” he said.
Mboweni also promised that an upcoming investment conference ought to showcase South Africa’s deep pool of capital and its “abundant resources” among other things.
The South African government published a redraft of the Mining Charter earlier this month which was a vast improvement on a proposed Mining Charter published by former mines minister, Mosebenzi Zwane, in 2017.
Current mines minister, Gwede Mantashe, said both government and the private sector had had to make concessions but that policy certainty had been achieved for the South African mining sector.
