The DA notes with concern that operational deficiencies within Eskom and Transnet have caused a loss of R200 billion to South Africa’s economy this fiscal year, as confirmed by SARS Commissioner Edward Kieswetter.
The Medium Term Budget Policy Statement (MTBPS), presented by the Minister of Finance, Enoch Godongwana, echoed this sentiment in which a R56.8 billion revenue shortfall was predicted. The deficit can be largely attributed to limited economic growth due to shaky state-owned enterprises (SOEs).
“The preliminary financial figures for October, which were also announced by the Treasury last week, emphasize this need even further,” says Dion George, the DA’s shadow finance minister. “In stark contrast to October 2022’s R40.6 billion deficit, October this year recorded an enormous R72.3 billion deficit. This testifies to the economic devastation caused by continuous load shedding and a dysfunctional freight rail system. Both of these factors were identified by the commissioner as primary drivers of persistent revenue shortfalls.”
With Eskom’s debt relief scheme as a guideline, where an astonishing R254 billion will be included in the national balance sheet, Transnet now wants the same.
“This entity manipulated the Government into accepting a large part of its debt burden. The DA warned in advance that Eskom’s debt takeover would set a dangerous fiscal precedent, because other non-viable SOEs would demand taxpayer-funded relief.
“We remain opposed to accepting Eskom’s debt, because it recklessly exposes taxpayers to the financial consequences of government mismanagement. The same applies to Transnet and every other dysfunctional SOE,” adds George.
In his MTBPS speech, Minister Godongwana acknowledged that a move towards leveraging private sector funding and expertise through public-private partnerships (PPPs) is needed.
“His recognition was long overdue. Instead of continuing this endless cycle of fiscal irresponsibility, the government must admit its flaws and implement substantial reforms. Instead of continuing to pursue a fruitless search for more taxpayers’ money, the government should speed up Eskom’s unbundling and Transnet’s privatisation.”
George believes exporters who have the capacity should be given unconditional access to Transnet routes to transport their products. “Furthermore, the government must immediately suspend bureaucratic barriers, such as BBBEE and localization criteria, in all procurement processes within Transnet. The business units under Transnet have no validity in central management and ownership. It must also be unbundled, and innovative public/private partnerships must be sought to own and manage it as a precursor to privatisation.”
A failure to quickly engage in meaningful privatization and open up the market for private investment will condemn South Africa to an eternal low-growth cycle, George believes.
“Any inertia threatens any possibility of achieving economic stability and places the burden squarely on the shoulders of future generations. The government must act now to move away from the unsustainable model of state-dependent SOEs towards a robust, privatized and competitively driven infrastructure landscape.”