South Africa's deputy president and new leader of the ruling African National Congress (ANC), Cyril Ramaphosa, said on Thursday it was "totally unacceptable" that State-owned companies had fallen prey to criminal elements, resulting in sovereign credit rating downgrades to sub-investment status.

Ramaphosa, who succeeded President Jacob Zuma as head of the African National Congress in December, said the ailing economy's recovery hinged on stabilising state firms which he said were facing serious challenges, raising concerns among investors who were also concerned about policy uncertainty. 

"We need to deal with the rot that has set in at State-owned enterprises. It is unacceptable, totally unacceptable that state-owned enterprises that are owned by the nation, that were set up to advance the interests of our people, have been hijacked and captured by certain interests," Ramaphosa told a breakfast event prior to leading a South African delegation to the World Economic Forum (WEF) next week.

Two of the world's largest rating agencies, S&P and Fitch, last year downgraded South Africa's rating to "junk" status, citing political and policy uncertainty as well as instability at State companies.

Ramaphosa told the breakfast meeting, organised by the country's promotion agency Brand South Africa, that  law-enforcement agencies had already begun the battle against corruption, but the next challenge was to increasing the momentum and arrest individuals implicated in wrongdoing.

"The most important thing is to address the issue of corruption and State capture. As a result, we welcome the establishment of the commission of inquiry that the president has announced," Ramaphosa said.

He commended the National Prosecuting Authority (NPA) for taking action against companies alleged to have defrauded the State.

The NPA's Asset Forfeiture Unit won a high court order to seize the assets of global consultancy McKinsey and Trillian Capital, which was then controlled by Zuma's friends the Gupta brothers, to recover R1.6-billion illegally earned from power utility Eskom without a contract and without doing any work.

The companies were implicated in allegations of exerting undue influence on Eskom and other State-owned entities in former Public Protector Thuli Madonsela's "State of Capture" report.

"We want to see action being taken against those who have done wrong things. We have started seeing the beginning processes of precisely that. The national prosecuting agency is starting to move, and we welcome that," Ramaphosa said.

"We want them to act with urgency and increase the tempo of action that is being taken. The freezing of assets is an important component of that, but we want to see much more following on the actions that they should have taken a long time ago."

Ramaphosa said his ANC, which has governed the country since 1994 but has seen its support wane in recent elections, faced the task of building a "social contract" with South Africans in order to promote renewal and unity.

He said South Africa's overriding message at the WEF in Davos, Switzerland would be that the country now had certainty and capable leadership to take it out of its economic quagmire, and its doors were open for business and investment.

Dealing with corruption would restore investor confidence in the country and attract back investment, he added.

Ramaphosa's delegation to the annual meeting will comprise officials from the government, business, labour and civil society.