South Africa's parastatals face growing turmoil

Significance

This comes amid reports that the state-owned airline will shortly receive a 10-billion-rand (760-million-dollar) bailout from the government, with almost 7 billion rand in debts due to lenders by September 30. The performance of South Africa's state-owned enterprises (SOEs) has featured prominently in rating agencies' downgrade assessments; Moody's cut embattled power utility Eskom's credit rating in June.

Impacts

• The dismissal of SOE officials implicated in Gupta-related corruption allegations will prove only a partial solution to institutional rot.
• Dampened growth of between 0.5-1.0% this year could be further worsened by additional state financing of SOEs.
• The South African Reserve Bank's recent mandate court victory will only temporarily allay concerns over its institutional independence.