Tycoon says better governance in state-owned enterprises necessary
State-owned enterprises Eskom and SA Airways would be better run if they were partially sold to private investors‚ South Africa’s richest man, billionaire Christo Wiese‚ said this week.
Selling part of Eskom would increase capacity and also hopefully strengthen corporate governance‚ the Steinhoff International Holdings chairman said at his Cape Town office.
“Another enormous albatross around our neck is SA Airways,” he said.
Eskom provides about 90% of the country’s electricity.
While it has stabilised its plants’ performance and managed to halt regular power cuts that stifled economic growth in 2014 and last year‚ tariffs have more than quadrupled since 2007 to help keep the lights on.
Meanwhile, SA Airways is dependent on government-guaranteed loans and is awaiting a decision by the Treasury on whether it will get more state support.
“We’ve got a lot of extremely low-hanging fruit; if we can just get the political will established‚” Wiese said.
“The corporate governance in a lot of the state-owned enterprises leaves‚ to put it mildly‚ a lot to be desired.”
SAA last reported a full-year profit in 2011 and has had seven acting or permanent chief executives in about four years.
Brian Molefe became Eskom’s sixth chief executive in a decade last year.
Wiese said the government should encourage independent power producers and also encourage the growth‚ as the country had been doing over the last few years‚ of alternative energy generation.
The Reserve Bank has forecast zero economic growth this year as the nation grapples with an unemployment rate of 27% and the threat of a credit-rating downgrade to junk.
Wiese said the government had failed to adhere to its own National Development Plan‚ which seeks to reduce joblessness to 6% by 2030.
While the outcome of municipal elections held on August 3‚ in which the ANC lost support and failed to maintain outright majorities in urban areas‚ put the party in an awkward position‚ it would probably not lead to more populist policies from the party‚ Wiese said.
“Clearly such an almost unexpected development does have implications for business‚” he said.
“The business confidence index has started turning up‚ because people are beginning to understand that no single party in South Africa will rule forever.”
Referring to economic prospects for the continent, Wiese said: “We are Afro-optimists.
“We believe that this country‚ and in fact the continent‚ have a great future.”