Johannesburg - Finance
Minister Malusi Gigaba laid out an ambitious 14-point programme
on Thursday to wrench the economy out of recession that included
the sale of non-core assets and partial privatisation of
state-owned entities (SEOs).
The plans to stimulate growth appear to represent an ideological shift
by the ANC, whose political alliance
with the unions has tended to make privatisation a dirty word.
A team commissioned by President Jacob Zuma to review state
firms last year recommended that some should be sold. Now the
government has set a date - March 2018 - by which to roll out a
"private sector participation framework".
"All of these items that we have announced ... they
constitute an important intervention to restore confidence and
demonstrate action, and outline an action plan that we as
government can be responsible for," Gigaba said.
The government would also reduce the number of debt
guarantees to this firms, especially those extended for
operational purposes, he said.
Analysts said Gigaba's plan could face opposition.
"I'm not sure how far he is going to be able to get with
this because I think ideologically there's a lot of opposition,"
NKC African Economics analyst Gary van Staden said.
"The last time I heard the ANC even talk about privatisation
or even talk about sale of state owned assets on any kind of
level is when Thabo Mbeki was president. It's been a long time."
South Africa's economy entered recession for the first time
since 2009 in the first quarter and is also struggling with high
unemployment and credit ratings downgrades.
The state of the economy is adding to the pressure on Zuma,
who is also facing persistent corruption allegations and
increasing calls for him to stand down from within the ANC.
Parliament will hold a no-confidence vote on Zuma next month.
Many of South Africa's 300-odd state-owned companies are a
drain on the government's purse. Ratings agencies have singled
out some as threat to its overall investment grade rating.
Gigaba did not say what would be going under the hammer
first, saying that would be determined by an audit.
BNP Paribas South Africa economist Jeff Schultz said
investors would want to see more details before endorsing it as
a viable turnaround strategy.
"It's very difficult to say at this stage. He was quite
cagey on what sales of non-core assets he was referring to,"
Schultz said.
South Africa sold its stake in mobile phone firm Vodacom
in 2015 to as part of a R23 billion capital raising
for Eskom.
Schultz said it might try to sell similar stakes, rather
than embracing formal privatisation.
"In much the same way as government sold down their stake in
Vodacom, the government is looking to do similar things to try
and raise some revenue in the near term," he said.