Eskom and SAA would be better run if they were partially sold to private investors, helping to solve economic challenges, said billionaire Christo Wiese, SA’s richest man.
Selling part of Eskom will increase “capacity, it would hopefully strengthen corporate governance,” Wiese, the chairperson of Steinhoff, said in an interview at his Cape Town office on Wednesday. “Another enormous albatross around our neck is South African Airways (SAA). The solution is fairly simple.”
Eskom provides about 90% of the country’s electricity. While it has stabilised its plants’ performance and managed to halt regular power cuts that stifled economic growth in 2014 and last year, tariffs have more than quadrupled since 2007 to help keep the lights on in Africa’s biggest economy. SAA is dependent on government-guaranteed loans and is awaiting a decision by the Treasury on whether it will get more state support.
“We’ve got a lot of extremely low-hanging fruit, if we can just get the political will established,” Wiese said. “The corporate governance in a lot of the state-owned enterprises, the so-called SOEs, leaves, to put it mildly, a lot to be desired.”
SAA last reported a full-year profit in 2011 and has had seven acting or permanent chief executive officers in about four years. Brian Molefe became Eskom’s sixth CEO in a decade last year.
The government should “encourage independent power producers and also encourage the growth, as we have been doing over the last few years, of alternative energy generation,” Wiese said.
The SA Reserve Bank has forecast 0% economic growth this year as the nation grapples with an unemployment rate of 27% and the threat of a credit-rating downgrade to junk. The government has failed to adhere to its own National Development Plan, which seeks to reduce joblessness to 6% by 2030, Wiese said.
“The road map is there,” he said. “They have accepted it, they simply need to implement it.”
Wiese, 74, has a net worth of R101.95bn, according to the Bloomberg Billionaires index, making him the continent’s richest man after Nigeria’s Aliko Dangote.
While the outcome of municipal elections held August 3, in which the ruling African National Congress lost support and failed to maintain outright majorities in four key urban areas, puts the party in an “awkward” position, it will probably not lead to more populist policies from the ANC, Wiese said.
“Clearly such an almost unexpected development does have implications for business,” he said. “The business confidence index has started turning up, because people are beginning to understand that no single party in South Africa will rule forever.”
Wiese is also the chairman of Brait and Shoprite Holdings, the continent’s largest food retailer with 2 200 corporate and franchise outlets in 15 countries across Africa and the Indian Ocean islands. While he’s been involved in a string of offshore transactions in the past two years, from Brait’s purchase last year of UK fashion retailer New Look to a R32.2bn deal for Steinhoff to acquire Houston-based Mattress Firm, the moves were opportunity-driven and don’t indicate a bias away from South Africa or the continent, Wiese said.
“We are Afro-optimists,” he said. “We believe that this country, and in fact the continent, have a great future.”