Johannesburg - South Africa could raise more than R86bn from the sale of assets as it seeks to support state companies including Eskom, Barclays said.
South Africa may sell land and real estate as well as shares in listed companies, according to a research note by the lender. Holdings in publicly traded firms, including a 14% stake in Vodacom and 40% of Telkom, would be quickest to sell, Barclays said.
“The government is going down this path reluctantly, with its back against the fiscal wall, and it remains wedded to the idea of a ‘developmental state’ in which state-owned enterprises are used to further a host of social and economic development objectives,” Barclays said in the note.
South Africa has pledged to contain debt and narrow the fiscal deficit over the next three years, seeking other revenue sources to help support cash-strapped state companies.
Finance Minister Nhlanhla Nene said in October the government would give Eskom, which is struggling to meet electricity demand, at least R20bn raised through the sale of assets.
Eskom, which supplies about 95% of the nation’s power, instituted managed cuts for the first time in six years in 2014 and warned there’s a high risk of more blackouts in February and March.
Power supplies will remain constrained for another two years as the company builds new generating facilities.
The disposals would be the first significant sales by the state in more than a decade. The last major asset sale was in March 2003, when it sold 25% of telecommunications company Telkom for R3.9bn.
The government also own stakes in companies through the Industrial Development Corporation. These include Kumba Iron Ore [JSE:KIO], Sasol [JSE:SOL], Sappi [JSE:SAP] and Life Healthcare Group [JSE:LHC], Barclays said.
Nene plans to cut the budget deficit to 2.6% of gross domestic product in the fiscal year through March 2017 from an estimated 4.1% this year. The Treasury plans to keep total debt at less than 50% of GDP.
Moody’s Investors Service and Standard & Poor’s downgraded South Africa last year, citing concerns about debt and weak economic growth.
The rand has depreciated 9% against the dollar since the start of last year and traded 0.4% weaker at 11.5736 at 10:48 in Johannesburg today.