South Africa eyes increased private investment in state enterprises

Out-Law News | 27 Feb 2018 | 10:14 am | 1 min. read

South African president Cyril Ramaphosa has unveiled proposals to introduce "new methods for funding state-owned entities that could include a shift towards a greater mix of debt and equity finance".

Ramaphosa told legislators in the National Assembly: “Where circumstances are suitable – and where the developmental function of a state-owned enterprise is not compromised – there may be opportunities to involve strategic equity partners as minority investors."

The president said ministers will be meeting chief executives and chief financial officers of state-owned enterprises “to clarify their commercial and developmental mandates and discuss their plans for financial sustainability and the promotion of local manufacturing”.

And Ramaphosa said his administration would work “to create a conducive environment for investment in efficient networks that enable the reduction of costs, enhance competition and remove barriers to entry by small businesses”.

Ramaphosa said: “The frustration that these entrepreneurs have to endure at the hands of the very state that is supposed to assist them is a matter of great concern. It is clear that the failure of some government departments to pay suppliers within 30 days has a devastating impact on small and medium-sized businesses.”

According to Ramaphosa, “the culture of late payment has gone on for far too long and has caused far too much damage, particularly to emerging black businesses”.

Meanwhile, South Africa’s government confirmed plans to host an investment conference, within the next three months, “targeting both domestic and international investors, to market the compelling investment opportunities to be found in our country”.

Ramaphosa pledged to woo investors in his post-inaugural state of the nation address. He said South Africa wanted to “reindustrialise on a scale and at a pace that draws millions of job seekers into the economy”. “We are going to promote greater investment in key manufacturing sectors through the strategic use of incentives and the number of other measures that government has at its disposal.”

In addition, Ramaphosa said special economic zones “remain important instruments we will use to attract strategic foreign and domestic direct investment, and build targeted industrial capabilities and establish new industrial hubs throughout our country”.