No more bailouts for state-owned enterprises - Twitter tells Mboweni

2020-02-16 10:32 - Lameez Omarjee
Finance Minister Tito Mboweni during a media brief
Finance Minister Tito Mboweni (GALLO IMAGES) ~ Gallo Images

Twitter users want Finance Minister Tito Mboweni to put an end to bailouts to state-owned enterprises.

In the early hours of Sunday morning the minister tweeted that issues of national importance should be decided on by citizens. He subsequently called for a "public debate" on bailouts to SOEs and using taxpayers' money on roads and other public services. 

"Ok. I hear you. For example, what are the citizens’ views on whether we should continue to bailout SOEs or invest the Public’s tax money on roads and other public goods!? I mean, REALLY?!! Let’s have a public debate!" Mboweni tweeted.

By 09:00 over 500 Twitter users had responded to Mboweni's tweet.

One user, Mmadikgosi Matshego asked Mboweni to do away with "political appointees". "Tell your colleagues to stop using SOEs to enrich themselves and their families. In short if you stop corruption, there won't be a need to bailout SOEs!" She suggested that if power utility Eskom's procurement processes are better regulated, then there would be no need for anymore bailouts.

Similarly, Brian Rams called for political interference at state-owned enterprises to stop. "SOEs need people with skills to run them successfully and profitably, not people who are politically elected to run them with no expertise," said Rams.

Cecilia Mthwane said that solving the problem at state-owned enterprises starts at leadership.

"Minister, no more bailouts; fire incompetent people and reshuffle incompetent ministers. The only problem with our SOEs is bad and rotten leadership," said Mthwane.

Another user, Skhosi frankly asked looters to be held accountable. "Can you jail everyone who has looted the SOE's then we can talk."

This Twitter conversation comes just two weeks ahead of the 2020 National Budget to be delivered on February 26. Mboweni will be expected to indicate how government plans to reduce its debt levels and achieve R150bn in savings.

Over the past few years, state-owned enterprises have posed a fiscal risk, according to Treasury. The state in the 2019 fiscal year provided lifelines to national carrier SAA, state arms manufacturer Denel and public broadcaster SABC.

While Mboweni has refused to provide Eskom debt relief, last year a special appropriation bill was passed by Parliament for Eskom to receive R59bn meant to help the power utility finance its debt and interest costs over the next three years. Eskom has a debt burden of close to R450bn. The R59bn is part of R230bn Treasury allocated to Eskom for the next 10 years. The parliamentary process allowed for the R59bn to be brought forward.

At the State of the Nation Address (SONA), this past week, Ramaphosa said that it would now be easier for independent power producers to receive licences to build and run plants above 1MW, in an effort to increase power generation, Fin24 previously reported. Municipalities will also be able to procure power from IPPs.

As for SAA, the Development Bank of South Africa has agreed to provide R3.5bn to the airline which is currently in a business rescue. The R3.5bn is government guaranteed. The final plan to restructure the airline will be revealed in the next few weeks, Ramaphosa said at the SONA.

Ramaphosa added that the process of stabilising SOEs will continue this year. "After years of state capture, corruption and mismanagement, we are working to ensure that all SOEs are able to fulfil their developmental mandate and be financially sustainable," Ramaphosa said.

"In consultation with the Presidential SOE Council, we will undertake a process of rationalisation of our state-owned enterprises and ensure that they serve strategic economic or developmental purposes," he said.