Eskom looms over new bid to lure investment
There has not been sufficient improvement in the performance of key state-owned enterprises (SOEs) such as Eskom and Transnet, which are critical to long-term economic growth, says trade & industry minister Ebrahim Patel.
He was speaking on Tuesday at the prelaunch of the second SA investment conference, scheduled for early November. The conference, which is expected to bring together about 1,500 international and local delegates, is aimed at attracting direct investments worth R1.2trillion by 2023.
It is intended to build on the work of 2018’s event, where R300bn in commitments was made by local and international investors.
According to data from the UN Conference on Trade and Development (Unctad), SA received R104bn ($7.1bn) in foreign direct investment (FDI) in 2018, a 446% increase on 2017. This was during a time when global FDI fell 19%.
According to Patel, in the first half of 2019 SA received R38bn in FDI. This was more than the total amounts for the 2015, 2016 and 2017 financial years.
Just weeks from the start of the event, the country has, however, been plunged into fresh bouts of load-shedding by Eskom.
The promised white paper on the restructuring of the power utility is due to be announced by President Cyril Ramaphosa and will give some indication as to how its management and structure will be tackled, said Patel.
Eskom’s difficulties are “a significant constraint”, conceded economic adviser to the president Trudi Makhaya.
Aside from Eskom’s operational difficulties, a number of other SOEs are facing operational, financial and governance challenges.
These include Transnet, the government’s logistics arm, which recently reported that irregular expenditure had risen to R49bn, while its credit ratings outlook was cut to negative by Moody’s Investors Service due to concerns about its ability to refinance R52bn in debt.
“There’s no questions that we are not yet securing the performance from SOEs that we need,” said Patel. He said progress had been made, though, on “the enormous challenge and price of state capture”.
NO MOMENTUM
Though the investment initiative should be lauded, the economic growth momentum the 2018 event was supposed to garner has not materialised, said Stanlib chief economist Kevin Lings.
The inaugural conference was almost immediately followed by unexpected loadshedding, which “undid a lot of the goodwill created by the conference”.
To avoid a credibility problem, the 2019 conference would have to ensure it tackles the blockages, including electricity supply, that may have prevented projects from going ahead.
Despite the challenges presented, Patel outlined efforts the state has made since the inaugural investment conference.
They include promised visa reforms, such as the introduction of visa-free access to SA for tourists from certain countries and the commitment to do away with travel rules requiring extended birth certificates for minors.
Other steps include the gazetting of the policy directive on issuing spectrum licensing.