South Africa considers privatisation to wrestle economy out of recession

Malusi Gigaba, South Africa’s finance minister said on Thursday the country was considering the sale of non-core assets and partial privatisation of state-owned firms to wrench the economy out of recession, according to a report by News Agency of Nigeria (NAN).

The privatisation was part of an “ambitious 14-point programme” to put the country back on the path of growth, Gigaba told newsmen in Johannesburg.

The minister said he would continue with the disposal of non-core state assets and roll out a “private sector participation framework” by March 2018.

In his words, “all of these items that we have announced… they constitute an important intervention to restore confidence and demonstrate action and outline an action plan that we as government can be responsible for.”

He stated that the government would also reduce the issuance of guarantees to state companies, especially those extended for operational purposes, reports NAN.

The plans to stimulate “inclusive growth” in South Africa appear to represent an ideological shift by the African National Congress (ANC), whose political alliance with the unions has tended to make privatisation a dirty word.

South Africa entered recession for the first time since 2009 in the first quarter and is also struggling with high unemployment and credit ratings downgrades.

Many of South Africa’s 300-odd state-owned companies, which include South African Airways, are a drain on the government’s purse.

Ratings agencies have singled out some as threat to the country’s investment grade rating.