Economists say phasing out poor performing State Owned Enterprises, known as SOEs will be a bold move towards reducing government debt.
Efficient Group Chief Economist Dawie Roodt says privatising SOEs will be the best option.
Economists were responding to President Jacob Zuma's announcement during his State of the Nation Address on Thursday that poor performing SOEs will be phased out.
SOE's consistently underperforming over the past few years include the South African Airways and South African Post Office.
The President told parliament the recommendations of the Presidential Review Commission to harmonise the SOEs, will be implemented.
State owned enterprises have performed poorly
Roodt says, “The possibility may be a privatisation of some of the State Owned Enterprises which I think it is an excellent idea and if you want to ask which are those of state enterprises needs to be phased out, my absolutely view is that all of them are performing below the potential, many of them are bankrupt, many of them need a lot of support at the taxpayer, so if you ask me which one needs to be phased out, all of them.”
Another economic expert Brain Kantor from Investec also gave his unwavering support for SOEs to be sold off. He says this will contribute significantly to reducing government debt.
“State owned enterprises have performed poorly, they lack the incentives that the private business operates under the incentives are not helpful, so you get waste, you get inefficiencies, you get people over paid, so if you sell them or sell part of them , you reduced the government debt.”