South Africa economy chief hints at privatization, Moody’s upgrades

Zhai Jianlan | Xinhua | Getty Images

Cyril Ramaphosa speaks during an event commemorating the third anniversary of former South African president Nelson Mandela’s death in Johannesburg, South Africa, on Dec. 5, 2016.

A key figure in charge of South Africa’s economy has hinted at his appetite for privatizing the country’s ailing state-owned enterprises (SOEs).

“Why not?” responded National Treasury Director General Dondo Mogajane, when asked by Reuters Saturday if it was possible for segments of South Africa’s publicly-owned firms to be sold.

“There have to be new ways of looking at these things. Are we talking privatization? Are we talking equity partnership? Let’s give an opportunity for new ministers to unpack what it means,” he added.

New South African President Cyril Ramaphosa, as part of his drive to revive the economy and stymie corruption, has spoken of reforming the country’s more than 700 state-owned enterprises. These include utility firm Eskom, which provides most of the country’s electricity, and South African Airways, both of which are loss-making.

“We will need to confront the reality that the challenges at some of our SOEs are structural,” Ramaphosa said in his debut State of the Nation address in February. “SOEs cannot borrow their way out of their financial difficulties,” he added.

Ramaphosa appointed two-time former Finance Minister Pravin Gordhan to head up the Department of Public Enterprises in Februry. Gordhan is known for his tough stance on graft.

But, genuine reform to South Africa’s state-owned enterprises could provide difficult. “The main constraint is ANC (African National Congress) policy,” Francois Conradie, head of research at South Africa-based NKC African Economics, told CNBC via e-mail.