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State to continue to play a role in the economy: Gigaba

JOHANNESBURG: The state will continue to have a stake in the country's economy going into the future, Public Enterprises Minister Malusi Gigaba said on Tuesday, 13 November 2012.
"[I would like to say] very firmly that the state has a right to play [a role] in the economy and we will continue to do so," Gigaba said at a New Age/SABC breakfast briefing.

The minister was responding to a question on whether the state should be involved in the country's airline, South African Airways (SAA).

"The airline is owned by the state; it is our duty and right to support the airline as we did with Eskom. What is at stake here is the contestation that the state has a right to get into the economy -- companies like SAA to assist us to do so," he said.

This comes on the heels of calls from some quarters that the national carrier should be privatised and that it was suspected of being involved in uncompetitive behaviour.

The airline in October reported an increase in revenue of R23.8 billion for the year ended March 2012, up from R22.6 billion the previous year. It reported a R1.3 billion operating loss, while also reporting R128 million in irregular expenditure. This was up by R85 million from the previous year.

Gigaba had previously expressed concern about the rate of cash burn, which had affected the airline's working capital. He, however, had said the state would continue to provide oversight and support to the airline, which had recently experienced mass resignations, including that of eight members of the previous board.

The state played a role in the economy for pragmatic reasons and to correct market failures, Gigaba said.

The state-owned SAA, which flies out to cities such as Mumbai and Soa Paolo (which form part of the IBSA group of countries), supported the country's economy.

What was needed from the new board - which is headed by Vuyisile Kona - was the provision of a long-term strategy, which would see to it that the airline was properly capitalised.

"That is what is needed to give certainty to government," said Gigaba of the big challenges facing SAA.

Government in October announced that it had granted the airline a R5 billion guarantee for a period of two years starting from 1 September 2012. This would enable SAA to borrow from the financial markets, thus ensuring that the airline continued to operate as a going concern.

On the issue of the demise of 1Time Airways, which had recently announced that it had applied for liquidation and grounded all of its operation with immediate effect, Gigaba said he was concerned at the prospect of job losses.

In terms of broader job creation, Gigaba said the country's major infrastructure plan, comprising 18 Strategic Infrastructure Projects (SIPS), would need private-public partnerships as the money needed could not solely come from the fiscus.

The plan, he said, would also ensure the participation of black business.

"... What we need is boldness on the part of the state; [we need] a coordinated effort to say this is how we plan to support black economic players. When we spend money, there must be a clear view that we want transformation," he said.

Gigaba said South Africa's political and economic systems should be reputable, fair and promote social justice.

"We all realise that there is a high price to be paid for inequality and it is a social curse that we will bear if nothing is done," he said, cautioning that greed needed to be tackled for the equitable distribution of wealth.

"The steps we take now can guarantee that we have a future or they can undermine it," he told the briefing.

"Our country will not realise meaningful social and economic justice if capital is not allocated in growth enhancing sectors of the economy and ensure the creation of labour intensive jobs for the majority of citizens. We need to build a culture of continuous investment and project implantation," said Gigaba.

SOURCE is a South African government news service, published by the Government Communication and Information System (GCIS). (formerly BuaNews) was established to provide quick and easy access to articles and feature stories aimed at keeping the public informed about the implementation of government mandates.
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