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Era of costly bailouts for failing SOEs that have been drain on economy over – ANC document

SAA is one SOE which has received numerous state bailouts.

SAA is one SOE which has received numerous state bailouts.

Published May 15, 2022


An ANC draft discussion document on the economy, prepared for its conference, has proposed an evaluation to determine which of the many state-owned enterprises (SOEs) should be sold.

The paper boldly claimed that the “era of bailouts for state-owned enterprises is over”.

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The document outlines the ANC’s strategic approach to economic transformation and highlights a number of key policy issues that require deeper thought and discussion.

The discussion document is still in the draft stages and has not been finalised by the ANC's national executive committee. Once final, it will be distributed for discussion at the ANC's national general council (NGC – also known as the policy conference) in July and its December national conferences.

The draft paper notes that SOEs have been a drain on the economy and the fiscus, proposing an evaluation to determine which should be sold, repositioned or consolidated.

It states that workers placed at risk through restructuring and repositioning would be retrained and employed elsewhere.

"Most of these state-owned enterprises were once well-run, profitable companies that were internationally competitive," the paper read.

"The decade of state capture destroyed many of them, as have structural changes in some of their sectors."

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The paper further read that the government's efforts to clean up corruption and appoint competent management would not rescue the majority of struggling SOEs and that those should just be closed or sold.

"There is no shortage of buyers wanting to buy some of the state-owned enterprises. Equity partners may be required in some instances," the paper read.

"Time is running out. The status quo cannot survive."

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The economic transformation draft document also suggested that the government remove some Eskom debt and cautioned against buying an oil refinery, which is under consideration by the Central Energy Fund.

It also suggested a bigger effort to lower fuel prices through a revision of the margins for wholesalers and retailers and a reduction of the fuel levy.

The paper stated that policies were also urgently required to increase investment in electricity generation capacity and the energy mix. both by public and private entities.

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Overall, the paper concluded, drastic measures needed to be adopted to transform the country’s economy.

The party also recognised that its “failure” to deal rigorously with corruption in much of the past decade “weakened the ability of the state to provide infrastructure and other services”.

“Over the past 10 years, slower growth has brought a fall in the rate of job creation and rising unemployment. Ownership of financial assets is still deeply unequal, with estimates suggesting that the richest 5% of households own well over three quarters of the total.

“Support for small and medium businesses and land reform have remained too small to transform livelihoods and economic opportunities for the vast majority of our people.

“Access to quality education is still largely determined by where you live and how much money your parents make. The mobilisation of investment in new productive capacity has been inadequate and, since 2008, has been severely constrained by the shortage of electricity and load shedding,” the report read.

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Political Bureau