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The South African economy has recently been hit hard, which has led to a recession.
The new Finance Minister, Tito Mboweni, has now seen him entrust the rather difficult job of straightening the economy.
As the unemployment rate continues to climb, Mboweni and President Cyril Ramaphosa will have to make radical changes to redress the situation.
The president has already signed a bill introducing a fixed minimum wage. The next challenge, the most daunting, will be to take care of our state-owned, money-draining companies, reports MyBroadband.
Let's start with Eskom. Business Day writes that the electricity company, which provides about 90% of South Africa's energy needs, has doubled its debt service costs in a single year, reaching 45 billion rand. .
As a result, Eskom is cited as the biggest risk for the South African economy. That said, he was helped on the path of economic destruction by other hemorrhagic state enterprises, such as SAA, SABC and the post office SA.
One of Mboweni's main topics of discussion after his appointment was his 5 billion rand rescue plan for SAA, as well as a 9.9 billion rupee bailout for the SA post office .
This decision has frustrated many South Africans because of the reputation of these organizations for sustaining heavy and repeated losses.
Mr Mboweni pointed out that many state-owned companies needed to be reconfigured, stressing the SAA as a state enterprise in need of "drastic measures".
Ramaphosa has described state-owned enterprises as "corruption sewers". He is obviously not a fan.
Deon Fredericks, Acting CFO of SAA, recently said companies that have contracts with SAA are reducing their terms from 21 to 7 days.
It is apparently an attempt by these providers to recover their money before any possible financial collapse of the SAA.
The SAA also barely pay the lenders 5 billion rand, which are due before the end of November.
Even if this payment is made, SAA will have to find an additional 9.2 billion short – term loans by the end of March 2019.
Democratic Alliance leader Mmusi Maimane has called for the privatization of poorly performing state-owned enterprises, saying privatization of state-owned enterprises would introduce competition into key industries.
When you compare private companies to their government-run counterparts, Maimane's ideas seem to weigh heavily.
Airlines companies
SAA, because of its links with the government, has very little competition, with the exception of Comair under its brand Kulula.com and its activities on domestic flights of British Airways.
Here's how the two compare:
Telecommunication
Broadband Infraco is an SEO in the telecommunications sector that provides a long distance network infrastructure.
The latest report available on the national government website is 2016-2017. In this period, Broadband Infraco suffered a loss of 125 million rand.
In contrast, private telecom giants in South Africa have performed much better.
The dominant mobile networks of SA, Vodacom and MTN have recorded considerable profits:
Diffusion
The SABC, South Africa's state broadcaster, is a disaster.
For the 2017/18 fiscal year, the SABC suffered a loss of 622 million rand, due to the cuts made by advertisers, the drop in audience and difficult economic conditions.
On the other hand, MultiChoice and its flagship products DStv and Showmax are doing exceptionally well.
While state-owned enterprises work well in many countries, looting and corruption have left our state-owned companies in a state of disrepair.
Whether or not Mboweni decides to privatize remains to be seen. What is certain is that the country can not bail out our state enterprises any longer without completely destroying the economy.
[source:mybroadband&businessday]Source link
