The south African government has been implored by a privatization team to sell some of it’s companies to improve public finances.
The team which was commissioned by President Zuma released a report during the weekend with no specification on what company was to be sold but some analysts were of the view that sales would probably be of smaller companies and not the likes of Eskom or SA Airways.
“The privatization recommendation should be taken with a pinch of salt, it will apply mostly to smaller parastatals and is unlikely to shift the dial on Eskom.” Nomura International’s emerging markets economist, Peter Attard Montalto, said.
The report stated that “governance, ownership policy and oversight systems were found to be inadequate” in state-owned enterprises and the team recommended that the government sell under-performing companies either fully or partially.
President Zuma had however stated in his State of the Nation speech last week that government needed to brace up to face the country’s weakening economy, which has been hit by a global slump in commodities demand and by power cuts, but analysts said it was unlikely to sell key state assets.
Meanwhile the rand has been reported to consistently weaken. The rand was weaker in early trade on Tuesday, giving up some of the gains triggered by the easing of global risk aversion driven by higher oil prices. The rand was also said to have dropped 0.12% to R15.7360/$
According to news24, the rand had slipped 0.12% to R15.7360/$ and despite gaining more than 3% against the dollar in the past two weeks, analysts expect the rand’s rally to run into obstacles in the run-up to Finance Minister Pravin Gordhan’s budget speech next Wednesday.
Bonds were firmer as yields fell, with the benchmark government issue due in 2026 shedding 2.5 basis points to 9.135%. Stocks were set to open flat, with the JSE’s Top 40 futures index inching up 0.16%.
With all these notwithstanding, South African markets are optimistic that all is not yet lost and the doom and gloom of the looming downgrade of SA may yet be avoided.