Thuma Mina speaks privatisation

Deputy Finance Minister Mondli Gungubele says the government has agreed to sell the assets of some state-owned entities (SOEs) and to allow private equity in others to boost falling revenues and service ballooning debt obligations.

But reversing the value-added tax (VAT) hike is out of the question.

Speaking to the Mail & Guardian this week, he also threw his weight behind suggestions that the Public Investment Corporation (PIC) should consider converting its loans in parastatals such as Eskom into equity to improve their balance sheets.

The suggestion was first made by ANC treasurer general Paul Mashatile, who last month revealed the matter had been discussed by the top echelons of the ANC.

“The state is exposed by SOEs by no less than R400-billion. That’s what we owe lenders. Eskom alone is owing more than R300-billion,” said Gungubele.


Gungubele, who is also the PIC chairperson, said that, if any of the state-owned entities were to default, the state would be forced to pay what was owed to lenders. “It means you must have R400-billion to bail [the SOEs] out. It is critical that the PIC has confidence in Eskom as it plays an important role in the country’s economic growth.”

Gungubele said it was critical that the government showed confidence in Eskom and, for example, by turning R100-billion into equity, it would have a significant positive effect on the utility’s balance sheet.

READ MORE: Thuma mina — Unions unmoved by president’s challenge

“What has been open now is that decision [to sell the assets] is taken. Even at [the ANC] lekgotla [this week], the president [Cyril Ramaphosa] was very clear that we are open now to private equity partners if it can improve [the financial situation in SOEs],” Gungubele said. It did not make business sense for the government to hang on to some of its loss-making entities.

“I am asking one question: If an asset is a burden to the state, it adds no value. Why do you torture the state with the keeping of that asset because the translation is that the burden of the cost of that asset translates [into] the inability of the state to provide services to the poor.”

Gungubele also expressed concern about the size of the public service salary bill. His main concern was that, of the R3-trillion budget, more than R1-trillion went into consumption and not into development.

“That’s a suicidal budget. As we speak, the fastest-growing share of our expenditure now is the salary bill and the interest to the debt, which is not less than R180-billion.”

He warned that a budget deficit meant the state was essentially spending most of its resources on servicing debt instead of on infrastructure and social upliftment, which was deterring investors.

He said the treasury had no intention of reviewing its decision to increase VAT, despite labour federation Cosatu’s call to do so.

“We are engaging Cosatu and explaining why VAT was the option. There is a series of taxation systems. One of the key things about tax is that it must be administratively efficient. It must not cost you more than what you want. Its burden must be distributed equitably.

“We know the pain but we have engaged Cosatu and we stay open. If there is a better way of quickly raising revenue, we would drop the VAT yesterday.

“At the moment the country must be saved,” he said. 

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Thanduxolo Jika
Thanduxolo Jika

Thanduxolo Jika is an investigative Journalist and Co-Author of We are going to kill each other today:The Marikana Story. The Messiah of Abantu.

Related stories

Andile Lungisa: Early parole for the house of truth

Disgraced Nelson Mandela Bay councillor Andile Lungisa calls for a change of leadership in the ANC immediately after being released on parole

Q&A Sessions: Frank Chikane on the rainbow where colours never meet

Reverend Frank Chikane has just completed six years as the chairperson of the Kagiso Trust. He speaks about corruption, his children’s views and how churches can be mobilised

God just got his hand back

Diego Armando Maradona, the greatest footballer to wear the number 10 jersey, has left the field

ANC: ‘We’re operating under conditions of anarchy’

In its latest policy documents, the ANC is self-critical and wants ‘consequence management’, yet it’s letting its members off the hook again

Public protector’s ‘mistakes’ were made to nail the president, court hears

Busisiwe Mkhwebane discarded facts that were inconvenient to her when she investigated the CR17 campaign, Cyril Ramaphosa’s lawyers argued

CR17 report is not perfect, but the investigation was rational, court hears

So says public protector Busisiwe Mkwhebane’s lawyer, who said she had reason to suspect the money was being laundered through the campaign
Advertising

Subscribers only

Dozens of birds and bats perish in extreme heat in...

In a single day, temperatures in northern KwaZulu-Natal climbed to a lethal 45°C, causing a mass die-off of birds and bats

Q&A Sessions: Frank Chikane on the rainbow where colours never...

Reverend Frank Chikane has just completed six years as the chairperson of the Kagiso Trust. He speaks about corruption, his children’s views and how churches can be mobilised

More top stories

Eusebius McKaiser: Mpofu, Gordhan caught in the crosshairs

The lawyer failed to make his Indian racist argument and the politician refused to admit he had no direct evidence

Corruption forces health shake-up in Gauteng

Dr Thembi Mokgethi appointed as new health MEC as premier seeks to stop Covid-19 malfeasance

Public-private partnerships are key for Africa’s cocoa farmers

Value chain efficiency and partnerships can sustain the livelihoods of farmers of this historically underpriced crop

Battery acid, cassava sticks and clothes hangers: We must end...

COMMENT: The US’s global gag rule blocks funding to any foreign NGOS that perform abortions, except in very limited cases. The Biden-Harris administration must rescind it
Advertising

press releases

Loading latest Press Releases…