South Africa’s Planned Privatization Of State-Owned Firms Gathers Pace

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Written by Kevin Mwanza

Privatization of state-owned companies in South Africa has been a thorny issue for long, but the government seems to be making progress in shedding of some of its loss-making inefficient corporations.

According to a BDlive report, investors have floated proposals to buy shares in Transnet, the country’s state-owned transport and logistics company , and airline assets owned by the government including South African Airways, SA Express, SA Airlink and Mango Airlines.

Lynn Brown, South Africa’s Public Enterprises Minister, Parliament’s portfolio committee on public enterprises on Wednesday that Transnet was looking at attracting private investment in new ports planned for Buchu Bay and Port Nolloth in the Northern Cape, as well the construction of new inland terminals that could be run by the private sector.

In the airline sector, Brown said a proposal to place South African Airways, SA Express, SA Airlink and Mango Airlines under the structure of a holding company was under consideration.

“The question is, should we merge SAA and SA Express, or create a holding company that keeps all four airlines – including Mango and SA Airlink – within our fold?” Fin24 quoted her telling the committee.

“My preferred choice is to merge them so that they still do the things that they were tasked to do.”

South African law allows the government to cede up to 25 percent of the airlines to an equity partner, Brown said, adding that, whatever the outcome of the process, government is sure to seek a strategic partner from the private sector.

State-owned companies were also looking for opportunities to expand markets in Africa.

Transnet  ha also set its sights on opportunities in other African countries including  Tanzania, Kenya and Burundi; Eskom, South Africa struggling main electricity producer, is eying the Democratic Republic of Congo, Mozambique and Uganda; and SA Express is looking at Ghana.

Several South African state-owned companies are currently experiencing tough financial times and the government has on several occasions been forced to dip into its coffers for bailouts to keep them afloat.

Corruption and poor management have also been blamed for the billion of rand in losses these companies have recorded in recent years.

In 2015, the South African government spent nearly 10 percent of its total annual budget in servicing debts and paying money to help these companies.