Interfering with the Public Investment Corporation (PIC) is taboo. Eskom, South African Airways and other state-owned enterprises (SOEs) are a risk to the economy through criminality and incompetence. But if we look at those two situations dispassionately, one may be the answer to the other.

The PIC is the largest single investor in Naspers N shares, with a stake worth R230bn, about 12% of the PIC’s almost R2-trillion assets under management.

Considering that the major part of its current value in Naspers arose through the unprecedented Tencents appreciation, the portion of profit that exceeds even a superior investment return should be regarded as windfall or super-profit and, in the national interest, be used to fund the SOEs to the tune of R50bn, a mere 2.5% of the PIC’s assets.

Such robust action in this time of crisis would have beneficial outcomes far exceeding any negative policy implications, such as stabilisation of the budget, maintenance of SA’s investment ratings, containment of interest amounts paid on borrowings, support for the rand and, consequently, lower inflation.

In addition, by selling a portion of its Naspers holdings for that purpose, the PIC would be de-risking, since too much of its assets are exposed to that one company and, in turn, to Tencents and, indeed, China.

Even in the unlikely event that the PIC lost all of its 2.5% stake, this would easily be made up by increases in its other assets by virtue of a better economic environment.

Sydney KayeCape Town

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