State assets sale; Telkom job cuts anger; ANC rifts; Tito’s Davos challenge; SA lags in social mobility

By Linda van Tilburg

  • The Government  is accelerating the sale of state assets to fund cash-strapped South African Airways and other distressed state-owned companies. The most urgent need is at SAA. Yesterday was the deadline for SAA to raise R2bn from the government to avoid a disruption in its services. The loss-making carrier has already burned through a loan it got from banks last month according to Bloomberg sources and lenders are said to be hesitant to step in again. Assets high on the list for sale include part of the stake in fixed-line operator Telkom and prime properties on Cape Town’s waterfront. Bloomberg reports that The National Treasury wants to show some progress on plugging shortfalls to try and save South Africa’s last investment-grade credit rating. The government’s asset-disposal program has stalled since it sold 25% of Telkom in 2003.
  • Meanwhile the Communication Workers Union has called for an urgent meeting with the ANC and the Minister of Communication. The CWU says it is angry about the plan to cut 3,000 jobs at Telkom as it struggles with declining performance in fixed voice and fixed data services. The union warned Telkom not to continue with its plans but to engage in meaningful dialogue in an attempt to avoid what they called a jobs bloodbath or they said, Telkom would face mass action. The Federation of Unions of South Africa, Fedusa earlier called on the government to dismiss the entire board of Telkom with immediate effect over “gross leadership failure of the last five years and a lack of strategic direction and planning.”
  • ANC decision-makers met over the weekend to discuss how to deal with the ailing state-owned enterprises. The Executive committee of the party gathered against the backdrop of renewed power cuts, flagging economic growth, calls for changes to the Cabinet and public spats between senior ANC leaders. Director of Research at the Mapungubwe Institute for Strategic Reflection, Susan Booysen said President Cyril Ramaphosa needed to show decisive leadership because this is not the time to debate, it was a time that demanded decisive action. Ivor Sarakinsky, a professor at the Wits’ School of Governance told Bloomberg that there was a re-alignment within the ANC with deputy President David Mabuza looking beyond Ramaphosa as his ally.
  • This week Finance Minister Tito Mboweni will lead the South African Davos offensive as Ramaphosa decided to skip the annual meeting of the World Economic Forum in Switzerland to focus on domestic issues. Mboweni indicated that he would be flying the structural reform flag at the WEF with the finance minister indicating that there was a determination on the part of the South African authorities to implement serious structural reforms and to put the state-owned entities on the correct path. He said it was not a place where long speeches were read, but a place to speak “on your feet and make your argument and convince other people.” Mboweni was hinting that the various meetings of the South African delegation could lead to it striking “deals on the sidelines.”
  • With a plethora of reports released as world leaders get set to attend the Davos forum; the United Nations has indicated that economic inequality in the world is at historically high levels and is increasing. Over 70% of the world population live in countries where inequality has grown, and this includes China and India. South Africa ranks 77th out of 82 economies in a social mobility study that measured health, education, technology, work and protections. Where it fared slightly better is in social protections where it ranks 40th out of 55. Areas where the UN pointed out that South Africa needs improvement is work opportunities where it ranked 80th and education quality and equity; also at 80th spot out of 82 countries.