DAVOS, Switzerland—South Africa’s government won’t provide fresh money to aid Eskom, the country’s finance minister vowed Wednesday, saying that private money would be needed to stabilize the troubled state-owned electric company.
“I’m ruling out public support,” Malusi Gigaba said in an interview on the sidelines of the World Economic Forum’s gathering here.
Eskom is tied up in allegations that a prominent business family close to President Jacob Zuma received overly lucrative contracts from state-owned companies. Mr. Zuma and the Gupta family have denied wrongdoing.
Eskom is teetering, and the government has guaranteed billions of dollars of its debt. “If anybody asked me what’s the one thing that keeps you awake at night, I would say Eskom, without a doubt, because the financials of Eskom are unsustainable,” Mr. Gigaba said.
The utility poses a conundrum: South Africa is trying to demonstrate fiscal rectitude to shore up worried financial markets, so it doesn’t have much room to spend. Yet even partly privatizing the utility could lead to job losses among workers who form a key part of the ruling African National Congress’s base. What’s more, finding private buyers for stakes in the ailing company could be difficult.
Mr. Gigaba said the government has privatization policies, even if it has done little to carry them out. “What we have been lacking all along is the courage to go ahead to implement programs of that nature,” he said.
South Africa is trying to boost the confidence of international investors, which has been dented by scandal and the uncertainty over how long Mr. Zuma will stay in power.
Still, the rand strengthened Wednesday to less than 12 to the dollar, a level last seen in 2015, although that is partly due to a broadly weak dollar. Mr. Gigaba hailed the move as a “major sign of confidence.”
He said the government—he has been a minister since Mr. Zuma became president in 2009—had been “rhetorical about transformation” and had created an “artificial dichotomy between transformation and growth.” They must be balanced, he said.
“You cannot say that, ‘The economic aspirations of the black majority do not matter, all you need to do is grow the economy,’” Mr. Gigaba said.
Much of South Africa is consumed by speculation that Mr. Zuma will step down to make way for Deputy President Cyril Ramaphosa, who succeeded him as head of the ANC. Asked if Mr. Zuma would deliver a scheduled state of the nation address next month, Mr. Gigaba said, “So far, yes.”
Mr. Gigaba also rebuked auditing firm KPMG for its alleged role in the Gupta scandal. KPMG International said last year that it hadn’t found any illegal behavior at the firm but the work for the Guptas fell short of its professional standards. It also said the South African unit’s top executives had resigned.
“I don’t think they’ve done enough,” Mr. Gigaba said.
Such scandals are “examples of a rot that the corporate sector in South Africa needs to look at with the same robustness and vigor that we have looked at public-sector corruption,” he said.
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