Gigaba praises South Africa's SOEs

Finance Minister Malusi Gigaba. (Pic: Gallo Images)
Finance Minister Malusi Gigaba. (Pic: Gallo Images)

Johannesburg - Finance Minister Malusi Gigaba said despite the criticism levelled against state owned enterprises (SOEs), the companies were functioning well and doing "great work".

But he admitted that the governance of many of the SOEs needed to be fixed. Gigaba added that despite “one or two problems”, the enterprises were making a significant contribution to South Africa and should play a leading role in radical economic transformation.

“We talk ourselves down, our state owned companies are functioning well,” he told an economic conference in Kempton Park on Monday. The minister delivered a keynote address – titled ‘Roadmap towards inclusive growth’ at the two-day Ekurhuleni Investment Conference at  Emperors Palace.

Government must take responsibility

Gigaba said that all was not well at the state enterprises, but that a significant first step would be not to only improve governance, but also ensure that the government, SOE's main shareholder, improved its oversight. “A problem is that shareholders in the past dropped the ball and did not pay significant attention.”

Gigaba vowed that in future South Africans were going to see better from state owned enterprises.

“I want to stick out my neck and say SAA can and will be turned around, ” he said, also citing Transnet for performing much better than its ongoing criticism alluded to.

The finance minister said the government took a deliberate decision to intervene in the economy. The state’s role is in our case a deliberate political and economic choice.

“That is why we have state-owned companies in critical sectors through whose investments programmes we build critical economic and social infrastructure, drive investment, transformation and pursue industrialisation,” he said.

Poor planned cities

He urged cities in South Africa to do more in contributing to radical economic transformation.

“Cities are the engines of the South African economy and of growth,” Gigaba said. “But they are not performing as well as they should. City economic growth of 11% over five years is not sufficient. City job creation of 448 000 over two years is not sufficient.”

Gigaba cited the dispersed and inside-out spatial form that was inherited from apartheid as one of the main reasons for inhibiting growth. He said despite the massive investments in public housing, basic services and transport systems since 1994, both public and private investments have tended to reinforce apartheid urban development patterns. “This development path is the very opposite of inclusion.”

The 40x40x40 syndrome has shaped South African cities today -  that is 40 m2 house, 40 kilometres from jobs, with transport consuming up to 40% of household income, the minister said.

“We need to create high density, high-activity mixed-use nodes and spines, along public transport corridors, and we need to invest in efficient mass public transport along these spines.”

Gigaba said the creation of well-located multi-storey and mixed-income rental stock in these cities would pave the way to more equal cities, while metro had to actively fight prevent urban sprawl by saying no to new low density developments on the urban periphery.

Read Fin24's top stories trending on Twitter:

ZAR/USD
17.00
(-0.09)
ZAR/GBP
21.24
(-0.12)
ZAR/EUR
19.14
(-0.13)
ZAR/AUD
11.81
(-0.13)
ZAR/JPY
0.16
(-0.20)
Gold
1774.74
(+0.03)
Silver
18.05
(+0.01)
Platinum
808.00
(+0.25)
Brent Crude
42.78
(-0.79)
Palladium
1914.01
(+0.62)
All Share
54521.90
(-0.17)
Top 40
50179.89
(-0.26)
Financial 15
10150.02
(-0.64)
Industrial 25
76554.73
(+0.52)
Resource 10
50138.02
(-1.24)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1576 votes
I am taking a hit, but should be able to recover in the next year
23% - 2069 votes
My finances have been devastated
34% - 3090 votes
It's still too early to know what the full effect will be
25% - 2241 votes
Vote