‘We have not sold South Africa's soul to the highest bidder’ — Ramaphosa
President Cyril Ramaphosa has once again rejected suggestions that China is a new coloniser and that his government has sold South Africa to the country by signing loan agreements for state-owned enterprises (SOEs).
“What we [government] are not in the habit of doing is handing over the assets of our country to any other country or entity, that I can assure on,” Ramaphosa said.
He was answering questions in Parliament before the National Council of Provinces on Tuesday.
The questions posed to the president focused on youth unemployment and the Youth Employment Service (YES) initiative, the Implementation of lifestyle audits, improving the governance of state-owned enterprises, land expropriation without compensation and the reaction of foreign countries and the details of the recent Chinese loans to SOEs.
Ramaphosa emphasised that it is not unusual for SOEs to raise funding through loans and that the country would continue to work on securing finances to run operations.
“South Africa remains the most industrialised country in Africa. We are going to continue using the financial muscle we can get from those who are willing to borrow us.”
These questions regarding South Africa’s relationship with China stem from the R33.4-billion loan that Eskom secured from the China Development Bank, which will be used for construction of the Kusile power station and Transnet’s R4-billion loan from the Industrial and Commercial Bank of China.
Ramaphosa revealed some information of the terms and conditions of both loans although Eskom has indicated that it won’t make the loan agreement public as this will place it at disadvantage when negotiating in the market.
Eskom will be granted a grace period of five years then the principal amount will be repayable in 20 instalments over 10 years. Ramaphosa said the interest rate charged on loan “is competitive when looking at global market”.
Another condition that the president revealed is that no Eskom assets have been used as security for loan.
“The China Development Bank is not entitled to any direct or indirect ownership of Eskom assets,” Ramaphosa said.
The funds acquired through Transnet’s loan will be used to finance the general operating activities and certain capital expenditure of Transnet.
Ramaphosa said Transnet would be responsible for paying the interest on the loan as well as the capital.
Youth Employment Service
Another question that was posed to Ramaphosa involved the Youth Employment Service (YES) and whether the private sector is involved in this initiative.
Ramaphosa answered by saying that the private sector has been called on to employ young graduates as part of the programme.
“The private sector, as part of the YES initiative, will ensure placements occur within all sectors of the economy. Big businesses will also facilitate the placement of young people in small, medium and micro-sized enterprises within their supply chain.”
Ramaphosa said that government has made some progress already.
“As we speak, we already have 65 000 young people who have registered and 32 companies who have showed willingness to provide up to 25 000 work opportunities to young people. These 65 000 young people are spread throughout the country.”
Another question looked at the progress of the implementation of lifestyle audits for members of the executive and other government officials.
Ramaphosa said he has directed the director general in the presidency to lead the process pertaining to the audits but that government is still deciding on the nature and form of the lifestyle audits.
A technical task team is expected to provide a set of recommendations for how to proceed for consideration by Ramaphosa by the end of October 2018.
“Various options are currently being considered for the implementation of the audit, with a view to developing a sustainable model that is consistent with our Bill of Rights and relevant legislation.”
“Everyone is going to be subjected to a lifestyle audit. From myself to all the members of the Cabinet.”
In replying to questions on the state of SOEs, Ramaphosa said that government has taken decisive steps to address the “severe financial, operational, governance and structural challenges” facing these entities.
Ramaphosa said the way boards are appointed will be relooked to bring back public and investor confidence.
“We are changing the way in which SOE’s have been working by ensuring board members are not involved in procurement processes and tightening audits.
“The appointment of new boards at strategic SOEs like Eskom, Transnet and Denel has done much to improve confidence and create conditions for operational and financial recovery.”
Government will continue to support investigations by law enforcement agencies, national treasury and the commission of inquiry into state capture into the affairs of SOEs, Ramaphosa reiterated.
Land expropriation without compensation
When asked about the issue of land expropriation without compensation and what implications this has for South Africa’s relationship with other countries, Ramaphosa said there is broad support for government’s position on land, as guided by the Constitution and the rule of law.
“I discussed the issue of land reform with UK [United Kingdom] Prime Minister Theresa May during her working visit to South Africa and she welcomed the way in which we are approaching the land issue, and understood that land reform could unlock further investment opportunities.”
Read the full questions posed to President Ramaphosa here: