Cape Town - Finance Minister Malusi Gigaba is of the view that South Africa's workers should not want to “exempt themselves” from supporting state-owned enterprises (SOEs), as these entities have a developmental agenda in the country.
Gigaba was responding to questions in the National Council of Provinces (NCOP) on Tuesday.
Fin24 earlier reported that trade unions vowed to resist any attempt by government to use worker funds to bail out state-owned entities. Workers relayed this message to Parliament during a briefing where the Public Investment Corporation (PIC) and the Government Employees Pension Fund (GEPF) gave an update on their annual reports and investment performance.
The PIC is responsible for managing the assets of among others the GEPF, which in turn has 1.2 million members.
During the Parliamentary briefing in October, PIC CEO Dan Matjila admitted that the entity had not “closed the door” on SAA and would consider investing in the ailing national carrier provided that certain conditions are met.
Gigaba said on Tuesday that SOEs regularly access funding from capital markets. “They have never defaulted on debt in the democratic period. For this reason the PIC and other asset managers regard state-owned entities as low risk investment, which offers not insignificant returns on investment.”
The Finance minister stressed that SOEs are a “worthwhile destination” for workers’ capital.
“The investment strategy of the PIC is not influenced by political considerations. The considerations are if the investment is worthwhile and if it offers a good return on investment,” Gigaba said.
No more state guarantees for governance lapses
In the same breath, Gigaba said that the framework whereby SOEs receive guarantees from government needs to be changed to ensure the money is not used to finance operational inefficiencies and lapses in governance.
Gigaba said many of South Africa’s SOEs experience a lapse in governance, which has an impact on their executives and their respective financial positions.
“What we believe is that these entities need to function as businesses. We therefore need to revise the government guarantee framework policy and stop giving guarantees for financial support for operational expenditures and waste and lapses of governance.”
Guarantees, however, would be justified if government asks SOEs to expand their capital investment beyond what their balance sheets can afford.
Gigaba added that there are certain SOEs that are "taking government for a ride".
"There are also many SOEs that are performing well, like Land Bank, ACSA (the Airports Company of South Africa), the Development Bank of Southern Africa and Telkom.
"And then there are those that don’t (perform well) and expose us to risk. That’s why we have proposed that the board of Eskom must be changed as a matter of urgency," Gigaba said.
To this end, Eskom needs a chairperson with integrity and board appointees will in future be subject to vetting.
Gigaba singled out the Passenger Rail Agency of South Africa (Prasa), Denel and Transnet as entities that need new boards.
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