Carol Paton Editor at large

The business model of several state-owned enterprises (SOEs) must be revisited and their capital structure overhauled if they are to survive in the future, Finance Minister Malusi Gigaba said on Wednesday. The overhaul could include an equity injection from the government, the disposal of equity stakes to the private sector or the introduction of strategic equity partners. The new approach would be undertaken in line with a policy framework on SOEs that is under development by the Cabinet. Gigaba said the "government recognises that the business models of some state-owned companies are unsustainable and their capital structures too reliant on debt. To confront these issues we will assist them to develop and implement robust turnaround plans." His comments echo those of President Cyril Ramaphosa in his state of the nation address that "state-owned companies can no longer borrow their way out of their financial difficulties" and affirm a bold new approach to private participation in t...

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