Mboweni ‘not interested’ in funding dysfunctional state owned enterprises

Finance Minister Tito Mboweni has announced his disinterest in ploughing funds into flailing state owned enterprises (SOEs).

Addressing parliament’s Standing Committee on Finance, Mboweni noted that the dire level of dysfunction which had enveloped several SOEs would no longer be remedied by continuous government bailouts.

The minister’s hard-line approach comes at a time when the South African economy struggles under the intense weight of lockdown. Stringent restrictions on personal movement and industries, in an attempt to flatten the coronavirus’ curve, have had an enormously negative impact on the economy. Making matters worse, is South Africa’s recent credit ratings downgrade which has diminished international investment confidence.

Dysfunctional state owned enterprises

In light of this dismal predicament, Mboweni argued that state resources, garnered from already-shrinking tax revenue, should be handled with extreme care and caution. As such, the finance minister voiced his discontent with dysfunctional SOE’s drain on the national fiscus. Mboweni noted:

“The minister of finance is no longer interested in funding defunct state owned enterprises. We are no longer interested in pouring public funds into dysfunctional state owned enterprises.”

Mboweni added, however, that government’s commitment to support functioning SOEs would continue. The finance minister pointed to Telkom as a primary example of an assisted shareholder model which was baring fruit.

South Africa’s arms and aerospace company, Denel, despite facing severe financial constraints and operational setbacks, would also continue to enjoy the National Treasury’s support.

Mboweni on the future of SAA

Mboweni referred concerns regarding South African Airways (SAA) to Public Enterprises Minister Pravin Gordhan, noting that the embattled national carrier’s collapse could have a silver lining. The finance minister used the example of Swiss Air, which dissolved in 2002 and was resurrected shortly thereafter as Swiss International Air Lines, as a clue to the future of SAA.

The national carrier, which was recently placed under business rescue administration following a series of severe financial losses, is rumoured to be resurrected in the form of new state-owned airline. Mashudu Raphetha of the National Transport Movement recently commented:

“It is a very sad day for the whole of the Republic that SAA is now going to shut down. We are now going to witness the emergence of the new airline.”

Public Enterprises Minister Pravin Gordhan is expected to announce details of SAA’s fate when the lockdown risk level approaches a point which allows for domestic airline travel.