A lobby group representing South African banks urged President Cyril Ramaphosa to prioritise the country’s wider interests rather than securing votes for the ANC if he is to boost confidence in the economy before May elections.
Ramaphosa’s plan to split its troubled power utility Eskom into three separate parts has met resistance from labour federation Cosatu. While his administration has replaced boards and top executives at state-owned companies, including Eskom, it hasn’t embraced the job cuts needed to bring costs down or the privatization of state assets.
“It’s crazy in this day and age we still can’t say privatisation, but some sort of private-equity stake has got to be there,” said Banking Association of South Africa Managing Director Cas Coovadia. “That brings in money, it reduces the state’s burden, brings in more accountability, expertise.”
Rolling blackouts are driving home just how much damage years of mismanagement, corruption and a lack of maintenance have done to the 96-year-old utility. Saddled with debt equivalent to about 8% of South Africa’s gross domestic product, Eskom isn’t able to produce enough electricity to meet demand or fund its operations, while South African Airways is surviving off government guarantees and the national broadcaster is struggling to pay its staff.
“Unless there is some serious restructuring of these organizations it would be quite irresponsible for banks to lend,” Coovadia said. “It’s not that banks don’t want to lend, it’s that banks have certain criteria.”