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Gigaba and CEOs air concerns over state-owned enterprises

Johannesburg – The governance of state-owned enterprises (SOE) remain a concern for Finance Minister Malusi Gigaba.

During a media briefing following a meeting with the steering committee of the CEO Initiative on Friday, Gigaba told journalists that among the issues discussed included the status of SOEs, particularly Eskom and South African Airways (SAA).

He explained that it is important for government to focus on the governance at SOEs, as well as the strength of their balance sheets in order to “ignite” confidence in investors.

Gigaba wants to see government guarantees being used for capital expenditure and not operational expenditure which is currently the case.

“If you look at the government guarantee framework of Eskom and the level of exposure of government, in particular at Eskom, if there were to be any difficulties, the financial risks to government would be quite enormous,” he said.

READ: Gigaba lashes out against ‘hysteria’ over SAA bailout

“Ultimately the government guarantees are borne by government and so government must pay very close attention to the ability of state owned companies to comply with the guarantee conditions and ensure that they become financially viable.”

Jabu Mabuza, chair of the CEO Initiative, explained that this meeting was the first working session with the finance minister. He said it was important to meet with the minister following the aftermath of the Cabinet reshuffle.

“We have been urged by CEOs, this is our economy and this is our country. We cannot boycott efforts to grow the economy.”

He commended Gigaba for taking a stand on certain issues, including how he dealt with the Denel Asia case.

READ: Denel cuts ties with Gupta-linked VR Laser

Earlier on Friday, the State defence company announced it was exiting its joint venture with VR Laser, Denel Asia, due to the damage the brand suffered. The company will consider alternative options in the Asia Pacific market. Gigaba welcomed the decision and said it sent a message of good governance.

Mabuza also commended Gigaba’s support of the removal of the Eskom CEO, his pronouncement that an unaffordable nuclear plan will not be embarked on and the appointment of a “credible head at Treasury”, Director-General Dondo Mogajane.

He said that business also supports the 14-point plan to revive confidence in the economy.

The CEOs also raised their concerns, among these being that the president should appoint a commission of inquiry to deal with State Capture.

Mabuza added that the rule of law needs to be maintained, as it appears that some people behave as if there is no consequences for breaking the law.

Speaking on SOEs, Mabuza said the right people need to be appointed to do the job right. “Whilst charity begins at home, it is important to deploy cadres, but we must get the right people in the right places doing the right things in the right way.”

Issues at Eskom need to be addressed, the power utility is responsible for half of government’s R700bn worth of guarantees to SOEs, he explained. Eskom needs to be well-functioning for the sake of economic growth.

“There are many South Africans out there willing to lift their hands and contribute to the operations and leadership of parastatals,” he said.


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