LATEST FINANCIAL NEWS
Ramaphosa’s rescue mission: President meets execs from over 20 SOEs
President Cyril Ramaphosa has met with chief executives of the country’s state-owned companies, where they discussed challenges they face in implementing their mandates.
The meeting came after the chiefs Eskom and SAA quit their jobs, serving to highlight the extent of operational problems in these key entities.
Ramaphosa said in a statement that the engagements had raised several critical areas that limited the ability of state-owned companies (SOCs) to drive growth and development.
“These range from inadequate capitalisation and poor governance to outdated legislation and political interference.
“As government, we are committed to working with the leadership of SOCs and stakeholders to urgently address these difficulties,” he said.
Several SOEs in trouble
The president met with executives from over 20 state-owned companies, including the Central Energy Fund, Denel, Eskom, PetroSA, the Passenger Rail Agency of South Africa, SAA and the SABC. He noted that several entities are facing severe financial and operational challenges that pose great risks to the South African economy.
Last week, SAA boss Vuyani Jarana resigned from his job, citing a lack of certainty around the funding for his turnaround strategy.
His resignation came two weeks after Phakamani Hadebe threw in the towel at Eskom, leaving the power generator in the midst of a financial crisis that has impacted the country’s electricity supply and contributed to the GDP contracting by 3.2% in the first three months of the year.
The decline was the biggest in a decade.
The meeting recognised that state-owned entities have “considerable resources and capabilities that, if better coordinated and managed, could have a far greater impact on economic growth and job creation”.
Government has poured billions of rands into various debt-ridden state companies, such as SAA and Eskom, raising calls for the firms to be privatised. This year, the National Treasury announced that Eskom would be split into three entities, generation, transmission and distribution, in a bid to improve efficiency.
The plan has been slammed by trade unions, who fear that the move would lead to job cuts.