We need decisiveness on SOEs reform for effective economic restructuring

By Bheki Mfeka

JOHANNESBURG – Decisiveness on the future of state-owned entities (SOEs) is critical and will test government’s credibility and capacity to manage reforms and restructuring of the economy in general.

The R10.5 billion SAA bailout is not a surprise, but the concern is lack of clear communication of the logic on investing in a new airline. It does not seem like a logical approach to fiscal sustainability and consideration of risks associated with continued investment in a fragile airline industry was taken into account.

If there was a compelling case for a new airline this would have been presented proactively in the Medium-term Budget Policy Statement (MTBPS) not as a reaction to threats outside the test of commercial and developmental viability as a primary consideration.

For all the work that has gone into advising government by various committees and studies regarding SOEs reforms, including the impressive work from the National Planning Commission, there is still no clear plan that, given the crises, should have been presented on the 700+ SOEs which are a drain to the fiscus.