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Cape Town - The success of state-owned entities, including the South African Post Office (Sapo) was to balance financial viability with the development mandate required as a government institution, Deputy Finance Minister Mcebisi Jonas said on Thursday.
Answering a question about the ongoing strikes at the post office and the failure of its management to stabilise the state entity at a New Age breakfast, the deputy minister acknowledged that there were “huge challenges across the board”.
He said state-owned entities, including the post office, had to straddle two mandates.
“They have a role to play in development and they must play that role effectively… but they also have to manage (financial) viability - they must be viable as business entities,” he said.
Jonas, a former finance MEC in the Eastern Cape and former CEO of the Eastern Cape Development Corporation, said: “You can’t have state-owned entities (SOEs) behaving like government departments.”
While he did not explain it, he implied they were required to be financially viable.
Noting that Treasury would be taking a conservative approach to handling the challenges presented by SOEs, he said: “No financing will happen outside of their balance sheet. When you finance them you drive them on the back of their balance sheet.”
Post office woes
He said there would be a more detailed announcement on how to resolve the troubles at the post office in the February national budget.
Those state-owned entities which were presenting problems to government were sliding “in one direction” or the other, in his view.
“Either they drive viability to one extreme (where there is) no development impact… or they drive development (with) no focus on viability,” he said, noting there had been management problems at the post office over time.
“It is a personal view, but they veer towards the development side of things without emphasis on viability,” he said, noting that there had been problems of management of the post office over time.
He said it had been generally badly managed.
Finance Minister Nhanhla Nene said in the mini budget (Medium Term Budget Policy Statement) on Wednesday that the country’s troubled state-owned entities – including the post office, the Land Bank, South African Airways and the SA Express – would not be bailed out. They would instead be restructured to make them financially sustainable.
READ: No bailouts for SAA, Sapo
Any capitalisation would be funded by the sale of non-core state assets. He said an assessment of all the interests of the state-owned entities and enterprises were being studied with a view to disposing of those which were not core to their developmental task.
While the protracted strike at the post office appears to be nearing an end, Minister of Telecommunications and Postal Services Siyabonga Cwele recently told parliament the overdraft of the strike-hit post office’s current account had jumped by R90m since June to R323m in August.
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- Fin24
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