South Africa giving billions to struggling state-owned firms
JOHANNESBURG (AP) — South Africa on Wednesday announced an additional $3.5 billion in government spending for struggling state-owned power utility Eskom and national carrier South African Airways over the next three years as the country’s weak economy faces an electricity crisis.
Finance Minister Tito Mboweni also announced an additional $15 billion over the next 10 years for restructuring the energy sector. South Africa relies heavily on coal for power production but must explore other options as aging plants falter.
Mboweni’s national budget address was largely bleak. South Africa’s economy is expected to grow by only 0.9% this year and unemployment is the highest in a decade at 29%.
The power crisis is having a negative impact on the economy, the minister said. South Africa continues to experience widespread and frequent power cuts.
“Government will do whatever it takes to ensure a stable electricity supply. As I said, it is our number one task,” Mboweni told parliament.
His speech faced criticism from opposition parties over the continued bailout of state-owned companies.
Mboweni said the government would spend over $950 million to settle debt for SAA. The airline is currently in bankruptcy and recently cut some flights to stay afloat.
“It is the very sincere hope of many that this intervention will lead to a sustainable airline” that is not a burden for the country, Mboweni said.
Others disagreed. “It is outrageous that funds desperately needed to stimulate the economy and the creation of jobs are poured into the SAA vanity project,” a lawmaker with the opposition Democratic Alliance, Alf Lees said in a statement.
Mboweni also announced more money for law enforcement agencies and the national prosecuting authority. He said some of the cases to be prioritized include those from the inquiry currently investigating allegations of government corruption during former president Jacob Zuma’s tenure from 2009 to 2018.