Johannesburg - South Africa should consider selling stakes in state-owned companies to private entities to improve their finances and tackle operational failures, according to a report commissioned by President Jacob Zuma.
Private-sector involvement could also be achieved through direct partnerships, according to the report, which was compiled by an independent committee and published on the Presidency website on Friday. The government will “ensure the implementation of the recommendations,” Zuma said in his annual state of the national address on February 11.
State-owned companies “must be financially sound, be properly governed and managed,” Zuma said.
The heads of South Africa’s biggest companies urged Zuma to sell state-owned assets at a meeting on February 9, one of a raft of proposals to try and avoid a credit downgrade to junk status.
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South African Airways, the national airline, and Eskom Holdings, which supplies almost all the country’s electricity, are unprofitable and a drain on the fiscus.
South Africa sold its 13.91 percent stake in mobile-phone company Vodacom Group in July for about R25 billion ($1.6 billion) to raise funds for Eskom.
The buyer was the state-owned Public Investment Corporation, Africa’s largest money manager and administrator of government-worker pension funds.
BLOOMBERG