Speaking at the Banking Association of South Africa’s 2019 banking summit held in Rosebank on Friday, Finance Minister Tito Mboweni went off script, addressing some of his biggest stresses as someone in the unenviable position of being responsible for South Africa’s economy.
Addressing our struggling state-owned enterprises, Mboweni told those in attendance: “I don’t want to be the minister of bailouts.”
He again expressed his opposition to a bailout for embattled airline SA Express. Mboweni rejected a request for a R200 million loan guarantee from government at the end of August.
SA Express was recently grounded due to financial and operational problems, with the airline owing Airports Company South Africa (ACSA) R71 million in debt, leading to a suspension that has since been lifted as the debt has reportedly been settled.
“My natural answer is shut it down,” he said of the struggling airline.
Mboweni said he wanted Eskom Finance, a financial services unit of the energy utility which has reportedly given loans totalling more than R8 billion, “out”.
The unit was established in 1990, with the main purpose of providing loans to Eskom’s staff. Bloomberg reported in 2018 that government was preparing to sell it.
Mboweni also admitted that South Africa’s economic growth was unlikely to reach the treasury’s target of 1.5% in 2019.
This, he said, was because conditions had changed and the country was facing unforeseen problems.
The finance minister also warned that he believed banks must not be pressured into agreeing to unsustainable loans due to government pressure, as this could lead to a situation where Treasury would eventually be forced to bail out the banks.
The minister believes the best way forward for South Africa economically is to focus on agricultural exports, particularly to China, he said at the summit.
(Compiled by Daniel Friedman)