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The Democratic Alliance (DA) questions the wisdom of the government's decision to buy a 55 to 60 percent stake in the Stellenbosch-based microsatellite manufacturer, SunSpace. This stake could be worth as much as R100-million, money that could be better spent addressing the nation's existing infrastructural backlogs.

The government announced last week that Cabinet agreed in principal to acquire an equity share in the satellite company that built SumbandilaSat, the government-owned satellite that was launched into space last September.

The departments of Science and Technology, Trade and Industry and Finance are yet to finalise the funding model for the acquisition of the company.

It is the DA's firm belief that government should not buy equity in commercial enterprises. Public money should be invested in infrastructure that enables enterprises to compete more effectively on local and international marketplaces. Government should be shrinking its stake in the business and industrial sectors, not increasing it.

The proposed government equity injection into SunSpace comes on the heels of a 30% shareholding in the company by the National Empowerment Fund (NEF), an entity of the Department of Trade and Industry, last August. This stake was valued then at R50-million and expected to be phased in over five years. The possibility of the NEF increasing its stake to 55% was also mooted at that time.

Clarity is needed about the total potential government shareholding in this company, whose current shareholders include the Stellenbosch University Investment Trust, individuals and the Dusty Moon Investment Group.

In a media interview SunSpace's CEO Bart Cilliers is quoted as saying that the deal will probably be concluded in June or July and that the company initiated the equity discussions because "the satellite business is geopolitically sensitive. Most clients are governments and want to know that the manufacturer has the support of its home government."

The DA believes that government does not need to be the major shareholder in commercial enterprises such as SunSpace to demonstrate its support for the local satellite industry.

In answer to a DA challenge in the National Assembly last October for the government to justify the cost of the R26-million SumbandilaSat within six months Science and Technology Minister Naledi Pandor replied that this could easily be done. Is spending R100-milliion for SunSpace equity this justification?