In his 2017 Budget speech, South Africa’s Finance Minister, Pravin Gordhan, highlighted the importance of reforming troubled State Owned Companies (SOCs) in the restructuring and strengthening of the country’s economy.
In recent times, many of South Africa’s SOCs have been struggling financial, often turning to National Treasury for billions in bailouts.
Speaking in parliament on Wednesday, Gordhan stated that the country’s Cabinet has endorsed a series of measures to reinforce governance and accountability in these SOCs.
“This imposes substantial obligations and responsibilities on boards and senior managers. We expect the highest standards of ethical leadership and understanding,” says Gordhan.
The Finance Minister says he met with members of the board of South African Airways, which has been on the spotlight in recent times for their alleged mismanagement of finances.
In a media briefing hours before Gordhan tabled the budget to parliament, he told journalist in attendance that the South African Airways chairperson, Dudu Myeni, couldn’t avail herself for the meeting.
“I met some board members nonetheless and I am positive about the turnaround strategy of SAA. They are now in the process of finding a suitable CEO and CFO for the company,” says Gordhan.
The director General of National Treasury stated that both the Post Office and SAA needed “substantial” capital injections which will have to be paid out in installments over a certain period. He further stated that the amount will be determined by October when the minister tables the mid-term budget.
In his budget speech, Gordhan stated that with a combined asset base of R1.2 trillion, the SOC’s are well-placed to partner with private sector investors in growing the productive capacity and infrastructure of South Africa.
“But they must be financially strong, governance must be sound, and boards and executives must have the necessary competencies to run complex business enterprises,” says Gordhan.