South Africa’s governing party has proposed using state-run unemployment and compensation fund surpluses to help rescue the country’s debt-laden power utility, raising the ire of labour unions.
In discussion documents released late last week, the African National Congress said the Unemployment Insurance Fund and the Compensation Fund had combined surpluses of R225 billion ($15 billion) in 2019.
Instead of investing this in listed companies and government bonds it should instead be used for “economic reconstruction” the party said. Power utility Eskom has debt of R484 billion.
“Business and labour would agree that social security funds could be tapped responsibly to address social and economic needs, in particular to deal with Eskom,” the ANC said. It also said the funds could be used to help finance industry and improve education.
The proposal, which ties in with earlier calls to use civil servants’ pension funds to reduce Eskom’s debt, has encountered opposition from labour unions, which are key allies of the ANC and have criticized the government for mismanagement and corruption at the utility.