SOUTH Africa could raise more than R86 billion from the sale of assets as it sought to support state companies including Eskom, Barclays said yesterday.
South Africa may sell land and real estate as well as shares in listed companies, according to a research note by the lender. Holdings in publicly traded firms, including a 14 percent stake in Vodacom Group and 40 percent of Telkom, would be quickest to sell, Barclays said.
“The government is going down this path reluctantly, with its back against the fiscal wall, and it remains wedded to the idea of a ‘developmental state’ in which state-owned enterprises are used to further a host of social and economic development objectives,” Barclays said.
South Africa has pledged to contain debt and narrow the fiscal deficit over the next three years, seeking other revenue sources to help support cash-strapped state companies. Finance Minister Nhlanhla Nene said in October the government would give Eskom, which is struggling to meet electricity demand, at least R20bn raised through the sale of assets.
Eskom, which supplies about 95 percent of the nation’s power, instituted managed cuts for the first time in six years in 2014 and warned there was a high risk of more blackouts next month and in March. Power supplies will remain constrained for another two years as the company builds new generating facilities.
The disposals would be the first significant sales by the state in more than a decade. The last major asset sale was in March 2003, when the state sold 25 percent of Telkom for R3.9bn. – Bloomberg