South African Finance Minister Malusi Gigaba laid out an ambitious 14-point programme Thursday to wrench the economy out of recession.
It includes the sale of non-core assets and partial privatisation of state-owned firms.
The plan to stimulate growth in the continent’s most industrialised economy appears to represent an ideological shift in the African National Congress (ANC), whose political alliance with the unions has tended to make privatisation a dirty word.
A team commissioned by President Jacob Zuma to review state firms last year recommended that some be sold. Now the government has set a date – March 2018 – to roll out a ‘private sector participation framework’.
“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,” Gigaba said.
The government would also reduce the number of debt guarantees to the firms, especially those extended for operational purposes, he said.
Analysts said Gigaba’s plan could face opposition. “I’m not sure how far he is going to be able to get with this because I think ideologically there’s a lot of opposition,” NKC African Economics analyst Gary van Staden said. “The last time I heard the ANC even talk about privatisation or even talk about sale of state-owned assets on any kind of level is when Thabo Mbeki was president. It’s been a long time.”
South Africa’s economy entered recession for the first time since 2009 and is struggling with high unemployment and credit ratings downgrades. Many of its 300-odd state-owned companies are a drain on the government.