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SOEs can spark radical economic transformation - Ramaphosa

May 27 2015 09:28

Cape Town – State-owned enterprises (SOEs) have the potential to stimulate “reindustrialisation and radical economic transformation”, Deputy President Cyril Ramaphosa said during the Presidency’s budget vote debate on Tuesday.

Ramaphosa said it made sense for the efforts of SOEs and private businesses to intersect in a partnership for economic and social development.

“These enterprises command significant resources and hold great potential for employment creation, infrastructure growth, technology development and small enterprise promotion,” he said.
 
“Together, they constitute a vital pillar of a vibrant mixed economy,” he added. “They must stimulate, support and enhance private investment and expansion.”

Ramaphosa said there was precedence for this sort of intersection between public and private in, for example, the co-generation of electricity by private companies and the renewable energy independent power producer programme.

“Imagine the contribution they [SOEs] could make to reindustrialisation and radical economic transformation,” he said.

Ramaphosa said his office's main task was to strengthen SOEs and to improve governance, stabilise finances, increase productivity and ensure state-owned entities effectively perform the functions for which they were established.

Eskom will regain its power

The leader of government business said he believed an SOE that would “regain its strength in our economy” was Eskom, a utility that was critical to “economic growth and sustainability”.
 
“As we are all acutely aware, the company has been experiencing severe generation constraints, exacerbated by significant operational and financial challenges.
 
“With the support of the war room located in the Presidency, progress has been made in the implementation of government's five-point implementation plan,” he said, adding the acting CEO Brian Molefe’s secondment was a welcomed move.

SAA flaps its wings

Ramaphosa said SAA’s turn-around plan had “begun to bear fruit”.
 
“The going concern status of the airline has been restored, costs have been reduced and operational efficiency is improving,” he said.
 
“We have confidence that the newly developed long term turnaround strategy will ensure that SAA continues to play a crucial role in facilitating commerce and tourism within our country and abroad,” he said.
 
“We are also encouraged by progress at the South African Post Office, where the strategic turnaround plan has been finalised for submission to Cabinet,” he said.
 
“The administrator appointed by Minister Siyabonga Cwele last year has undertaken a thorough diagnostic review of the challenges at the Post Office and a business model that is better suited to the changing postal services environment has been developed,” he added.

An upward trend

The deputy president, who was key in the negotiations that set South African on a course of democracy in 1994, said the press painted a negative picture of the country's progress.

“If we were to judge by the headlines… we may wrongfully conclude that we are failing in this effort of remedying the injustices of the past,” he said.
 
“But if we look beyond the headlines, which range from the exaggerated to the absurd, a different picture emerges.
 
“In his book The Long View, the economist JP Landman suggests that in examining progress in society one needs to focus instead on the trendlines.
 
“If we are to appreciate how far we have come, and if we are to understand where we are going, we need to examine the evidence over a number of years.
 
“We have to identify the trends and understand their meaning.
 
“To the discerning and careful observer, these trend lines tell us that South Africa is on an upward developmental trajectory.”

saa  |  eskom  |  cyril ramaphosa  |  economy
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