MBOMBELA – It will take some time for the Mpumalanga Economic Growth Agency (MEGA) to become self-sufficient.
CEO, Mr Xola Sithole, has told Lowvelder that the parastatal needed to be recapitalised, but first it had to earn the trust of the provincial government and prove it was on the right track.
Sithole was appointed as chief executive of the developmental finance institution in January, three months before the financial year ended.
The annual report for 2014/15 showed it achieved 36,2 per cent of its targets last year, despite spending almost its entire R250-million budget.
It had planned to invest R220 million, but managed R22 million; it meant to support 28 agri business or co-ops, but helped two; it aimed to create 300 jobs, and created four.
“The fundamental issue is that we did not have a strategy. If you don’t have a strategy, how do you decide where to spend money? Targets need to be linked to strategy, and these targets were not smart.”
Sithole spent 10 years at the Industrial Development Corporation working on similar projects to MEGA’s core mandate: Investments to grow the province’s economy. But he said it was still a long way from operating independently from government. MEGA needed a substantial capital injection to grow its loan book, Sithole says.
“To become financially sustainable, we must give out a lot more loans. We need to create a quality book going forward. To do that, we need capital.”
And before this could occur, MEGA needed to earn the trust of government. It had other assets, such as its “underutilised” property portfolio. Yet the Auditor-General’s (AG) most recent findings were that the entity couldn’t prove the value of its property.
“There were a lot of things that needed to be fixed from previous findings,” he said. “We identified those with the highest impact and low-hanging fruit. We need a multi-year approach.”
Restructuring, for MEGA to become the lean and effective machine Sithole envisioned it to be, was slow as there were regulatory requirements. He added that he couldn’t guarantee that in merely a year’s time MEGA will have met the targets it set while still finetuning its strategy, but its impact would improve.
“We are making meaningful progress. Our first priority is to steady the ship. It is a big task, but it has to be done. I intend to take it all the way.”
- Read more: Mega change on the cards
