Dumping SOEs is premature, politically risky – analyst

Minister of Finance Tito Mboweni’s bold suggestion that state-owned enterprises should be dumped is a good idea, though premature and politically risky, an analyst says.

Political and economic analyst Daniel Silke said the minister deserved credit for speaking his mind, but he was putting himself at risk of getting into a big fight with some within the ANC.

Silke said Mboweni’s statement reflected the view of a small group within the ANC that probably included President Cyril Ramaphosa, Public Enterprises Minister Pravin Gordhan, Mboweni himself and all those who believed the SOEs have become a burden on the fiscus.

The government has spent hundreds of billions of rands bailing out a host of SOEs, of which South African Airways, Eskom, Denel and the SABC were leading recipients of state financial assistance.

During his budget presentation on Wednesday, Mboweni announced state debt guarantees to the SOEs amounting to R13 billion for the next three years.

In recent years, the government has bailed out South African Airways, Eskom and Denel. But these entities need more bailouts.

“There is no doubt that there is a body of opinion within the ANC, with support from Ramaphosa, Mboweni and Gordhan, that the SOEs are a burden.

“I think now this is the beginning of the philosophical divide within the ANC,” Silke said.

The analyst maintained it was risky of Mboweni to question whether there was still a need for the SOEs, especially so close to an election, because he risked starting a fight with the ANC’s partners on the left.

Instead, the minister should have workshopped the matter broadly with the ANC and its allies first before expressing his view in public.

The ANC caucus appeared surprised as Mboweni spoke about the future of the SOEs, which Silke said was an indication that the idea was not accepted by many within the party.

Silke said there could be heated debate within the alliance in the next few months about Mboweni’s stance.

“Mboweni has got to be careful and not go it alone in making a dramatic policy change which would be problematic as the ANC believes in consultation.”

The analyst said Mboweni’s idea was a good one. “I give him credit for raising these issues and breaking from tradition. He is bold, I think these things need to be said.”

He added the minister was cracking the whip, which was necessary to halt the monetary wastage by the SOEs. “He is trying to whip them into shape and to make them scared.”

Silke refused to be drawn into commenting on whether it was a move towards the full-blown privatisation of state companies. He said it was premature to conclude that.

However, the government might be considering selling minority stakes in entities such as the SAA, where the private sector role would be ideal.

“They could sell minority stakes in order to turn the airline around and make it attractive for other airlines to come in.

“There are cracks in the armour that favoured a 100% control by the state.”

The reviewing of the public enterprises coincided with the recent announcement by Ramaphosa that he planned to restructure the government to enable them to function smoothly.

Ramaphosa was also expected to announce a leaner cabinet should the ANC win the May 8 election.

– ericn@citizen.co.za

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