, the Gauteng government is still pushing ahead with plans to launch a state bank and even a state-owned pharmaceutical company.
The pharmaceutical entity is supposed to address, among others, supply chain management, medicine procurement, distribution of medicines to provincial healthcare facilities, and medicine inventory and dispensary to the public.Independent analyst Khaya Sithole believes we are still a long way from seeing the establishment of both these entities.
“All of these things must be supported by the business case, particularly because, obviously, the seed capital or seed funding is going to come from public resources. So there has to be a very clear business rationale for doing this. Otherwise, it will essentially be an entity that relies on bailouts from inception, and that’s not where we want it to go.
“Firstly, the experience we have of the way state-owned institutions are run in South Africa does not fill anyone with confidence, and if these institutions fail, what it does is simply put a further hole in the fiscus because the fiscus would have to bail them out … ” For Coovadia, it would make more sense for the government to adopt a similar approach in addressing market failures in banking and pharmaceuticals.
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