State of SOEs weigh on second investment conference

There has not been sufficient improvement in the performance of key state-owned enterprises (SOEs) such as Eskom and Transnet, which are critical to long-term economic growth, trade and industry minister Ebrahim Patel said on Tuesday.

He was speaking at the launch of the second SA investment conference, scheduled for early November.

The conference, where about 1,500 international and SA delegates will gather, is aimed at attracting direct investments worth R1.2-trillion by 2023.

The conference is intended to build on the work of 2018’s event, where R300bn in investment commitments was made by SA and international investors.

According to data from the UN conference on trade and development (UNCTAD), SA received R104bn in foreign direct investment (FDI) in 2018, a 446% increase on 2017.

This was during a time when global FDI fell 19%.

According to Patel, in the first half of 2019, SA received R38bn in FDI.

This was more than the total amounts for the 2015, 2016 and 2017 financial years.

Just weeks from the start of the event, SA was, however, plunged into fresh bouts of load-shedding by power utility  Eskom.

The promised white paper on the restructuring of Eskom was due to be announced by President Cyril Ramaphosa and would  give some indication of how the challenges of its management and structure would be dealt with, Patel said.

Eskom’s difficulties were a significant constraint, economic adviser to the president Trudi Makhaya said.

But there has been progress made in the past 12 months to address Eskom’s problems — including efforts by the government to stabilise the utility’s finances and ensure it remains a going concern.

The government has also gazetted the long-delayed Integrated Resource Plan (IRP) — a road map for electricity investment — which helps outline Eskom’s place in the future energy landscape.

Aside from Eskom’s operational difficulties, which have led to additional financial support from the state, a number of SOEs are facing operational, financial and governance challenges.

These include Transnet, the government’s logistics arm, which recently reported that irregular expenditure had risen to R49bn, as well as cash-strapped national carrier SAA.

“There’s no question that we are not yet securing the performance from SOEs that we need,”  Patel said.

He said progress had been made, though, on “the enormous challenge and price of state capture”.

These efforts were being spearheaded by public enterprises minister Pravin Gordhan, who was working to identify those implicated and ensuring that private-sector counterparts implicated in state capture paid for their involvement, Patel said.

Despite the challenges presented by parastatals and the threats of further power cuts, Patel outlined efforts the state had made since the inaugural investment conference in 2018. 

They included promised visa reforms, such as the introduction of visa-free access to SA for tourists from certain countries, and the commitment to do away with travel rules requiring extended birth certificates for minors.

Other steps include the gazetting of the policy directive on issuing spectrum licensing.