South Africa’s Gigaba Says He Won’t Risk State Pensions

Malusi GigabaMalusi Gigaba Photographer: Simon Dawson
  • South Africa’s Gigaba Says He Won’t Risk State Pensions

South African Finance Minister Malusi Gigaba said he won’t ask Africa’s biggest money manager to provide funds to bail out state-owned companies that will put the pensions of government workers at risk.

“There is no attempt to dip into pensions for reasons that are unscrupulous,” Gigaba told reporters in Pretoria on Tuesday after a meeting with the board of the Public Investment Corp. The event was scheduled after media reports said that the National Treasury is seeking to use PIC funds to put into struggling government entities such as South African Airways.

The Treasury is in talks with the PIC about buying part of its 39 percent stake in phone company Telkom SA SOC Ltd., and the discussions are ongoing, Director General Dondo Mogajane said at the same event. The government knows that the PIC won’t take the entire stake, which is worth about 11.4 billion rand ($852 million), he said.

Gigaba met with the PIC after the Johannesburg-based Sunday Times quoted Chief Executive Officer Daniel Matjila as saying there’s a plan to remove him after he denied a request from SAA for a 6-billion-rand loan. Speaking in Pretoria, Matjila said he disputed that report, while PIC Chairman and Deputy Finance Minister Sfiso Buthelezi said the CEO had the board’s support.

Bloomberg News reported Friday that the Treasury is seeking as much as 100 billion rand from the money manager. The finance minister reiterated a Monday statement that the ministry hadn’t asked for that amount.

The Pretoria-based PIC has almost 1.9 trillion rand in assets and handles pension funds for South African state workers, including nurses and teachers. As well as cash for SAA, the government needs funds for utility Eskom Holdings SOC Ltd., oil company PetroSA and defense firm Denel SOC Ltd., Bloomberg News reported. A precedent for the PIC to help out came in 2015, when the money manager bought the state’s 25 billion-rand stake in wireless carrier Vodacom Group Ltd. to raise funds for Eskom.

The Treasury is in talks about how to fund SAA and will present some options to cabinet on Wednesday, Mogajane said. It’s still in discussions with Citigroup Inc. after the U.S. lender refused to extend the repayment period of a 1.5 billion rand loan. The PIC has done due diligence on the airline but the carrier fell short of the money manager’s investment criteria, Matjila said.

The CEO cut short a trip to the U.S. two weeks ago to respond to an allegation he used PIC funds to finance a personal project related to someone he is allegedly in a relationship with. The board accepted Matjila’s explanation and said it retains confidence in his ability and integrity. Buthelezi said the board had a duty to look into the allegations and there was no intention to remove him.

The former maths professor has been at the helm since late 2014 and was previously the chief investment officer.

The PIC has holdings equivalent to about 13 percent of the market value of companies that trade on the Johannesburg Stock Exchange.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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