South Africa\u2019s government should halt bailouts for state entities and review its ownership of more than 700 companies, according to a draft economic policy document compiled by the ruling party.<\/p>\n
The current model for state firms \u201cis dying,\u201d the African National Congress, which is due to hold its national policy conference later this year, said in the document seen by Bloomberg. \u201cThe era of bail outs for state-owned enterprises is over.\u201d<\/p>\n
The call for an overhaul in the government\u2019s approach comes after it sank billions of dollars into utilities such as power producer Eskom Holdings SOC Ltd. and the national airline with little return. Workers at the state arms maker haven\u2019t been paid for 18 months and the state broadcaster, post office and oil company plan to cut jobs, the ANC said.<\/p>\n
Eskom and other state companies were the prime targets of a looting spree, known locally as state capture, that ensued during former president Jacob Zuma\u2019s nine-year rule, and they remain hamstrung by unsustainable debt and a loss of skills.<\/p>\n
As a result the country has been subjected to intermittent power outages for more than a decade and mining companies have struggled to get their coal and iron ore to ports in the midst of a commodity boom.<\/p>\n
\u201cMost of these state-owned enterprises were once well-run, profitable companies that were internationally competitive,\u201d the ANC said. \u201cThe decade of state capture destroyed many of them, as have structural changes in some of their sectors.\u201d<\/p>\n
Government\u2019s options are limited as efforts to clean up corruption and appoint competent management will not rescue the majority of the stricken companies, the ANC said. Instead, it suggests companies could be closed or sold.<\/p>\n
\u201cThere is no shortage of buyers wanting to buy some of the state-owned enterprises. Equity partners may be required in some instances,\u201d the ANC said. \u201cTime is running out. The status quo cannot survive.\u201d<\/p>\n
Pule Mabe, a spokesman for the ANC, didn\u2019t respond to requests for comment.<\/p>\n