Fri Oct 28 02:30:47 SAST 2016

Stop the rot right now or it's game over for Team SA

The Times Editorial | 02 September, 2016 07:47

If the ANC fails to heed the words of caution from Cyril Ramaphosa and Gwede Mantashe on the growing perception that the government is at war with itself, perhaps the actions of financial institutions will jolt the ruling party out of its ruinous infighting that threatens to sink the economy.

The decision by Futuregrowth, the country's biggest private fixed-income money manager, to pull the plug on future loans to state-owned companies over concerns about how they are run, government infighting and threats to the independence of the Treasury, should trigger immediate and far-reaching reforms.

If not, then parastatals such as Eskom, Transnet and Sanral, which depend on private funders for hundreds of billions of rands in financing, could find themselves in an impossible predicament.

In the worse-case scenario, other lenders follow the Futuregrowth example or simply stop attending bond auctions and refuse to roll over loans when they mature.

Who, then, would provide the billions needed to complete the long-delayed Medupi and Kusile power plants and extend and maintain critical railway and road infrastructure, let alone the government's proposed nuclear power programme, with its projected R1-trillion price tag?

The country's tax base is simply too small.

Noting reports of ''patronage-driven contracts/potential contracts by SOEs to what appear to be politically connected persons'', Futuregrowth expressed particular concern at the opaque announcement that President Jacob Zuma would directly oversee the state companies. If this does not send a chilly wind through the corridors of power, nothing will.

The shoddy attempts by Zuma supporters to white-ant Finance Minister Pravin Gordhan, the disturbing influence on the state of the Gupta family, the proliferation of dodgy tenders, the kickbacks and the erosion of governance at state companies needs to stop right now.

If not, it's game over for the future of South Africa's development project.


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