STATE-OWNED ENTERPRISES
HILARY JOFFE: How do you solve a problem like Eskom?
What does it mean when President Cyril Ramaphosa talks about a new funding model for state-owned enterprises (SOEs), as he did in his state of the nation address? And what does it mean when Eskom talks about converting debt into equity, as CEO Phakamani Hadebe has been doing? There’s no question something radical has to be done to stop the constant drain on SA’s public finances that these enterprises have been over the past decade or more. The IMF has calculated that "transfers", in other words bail-outs, to SOEs have averaged 0.8% of GDP annually in the past eight years and cumulated losses have averaged 0.4% of GDP over the period. And apart from the cash that the government has had to transfer to rescue ailing enterprises is the much larger and ever more high-risk issue of the guarantees the state has made available to them, which now represent well over 18% of GDP and have come close in recent months to being called, both by South African Airways (SAA) and by Eskom. But Eskom dw...
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