Gordhan Plans Sweeping Changes for South Africa's State Firms


Extensive changes are in the offing at South Africa’s troubled state-owned companies as new Public Enterprises Minister Pravin Gordhan moves to tackle their many management and financial failings.

Power utility Eskom Holdings SOC Ltd. and several other state entities have been caught up in graft and management scandals over recent years and repeatedly called on the state to bail them out as their debt ballooned to unsustainable levels. Former union boss and businessman Cyril Ramaphosa, who succeeded Jacob Zuma as president last month, appointed Gordhan, a two-time finance minister, as his point man to sort out the mess at six of the biggest companies.

“Virtually every entity that we are supervising, or are responsible for, is going to have changes as far as the board is concerned,” Gordhan said in a March 16 interview in Johannesburg. “If you take out some of the negativity and some of the negative people, immediately your operations at that entity change. Your revenue changes, therefore your financial situation begins to actually improve. And then your financial credibility changes as well, so your ability to borrow changes.”

New Executives

Gordhan, less than a month into his new role, has zeroed in on some of the most pressing issues facing not just the companies, but South Africa’s economy as well. Eskom, desperate to attract funding, will have new top executives by mid-April, while a sustainable solution is being sought to the financial predicament of the debt-ridden South African National Roads Agency SOC Ltd. that doesn’t burden the state, he said.

“Every day, as we do the right things, and there’ll be more of that coming in the next three to four weeks, that will signal our intent,” Gordhan said. “I think we’re on the edge of a transition.” If successful, then when state-owned companies’ debt matures, it could be refinanced, repaid or rolled over, he said.



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