4 minute read
15 Mar 2023
05:20 am
South Africa’s dysfunctional SOEs such as Eskom and SAA have cost billions in public funds. Photo: iStock
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Government has forked out R331 billion between 2013 and 2023 to bail out the country’s troubled state-owned enterprises, National Treasury said on Tuesday.
Power utility Eskom received the biggest share of the cash injection over the 10-year period.
Treasury officials on Tuesday presented to MPs an update on the bailouts and government guarantees for the entities in the same period.
Head of assets and liabilities division Duncan Peters said many of the problems identified more than a decade ago still persist at most SOEs, indicating that there has not been much improvement despite new managers over time and strategic plans and state funding in place.
“They often lack oversight and accountability. There are weaknesses in boards, lack of transparency and accountability.
“There’s been a significant decline in financial performance in the last decade, with a direct impact on the fiscal framework. Their inability to deliver services required from them has shown us recently how it negatively affects the economy and the fiscus,” he told members of the Portfolio Committee on Public Accounts (Scopa).
ALSO READ: Ramaphosa plans for state company to house SOEs
He said the multiple bailouts for Eskom, SAA, SABC, and the SA Post Office have become a fiscal burden, with the high debt posing “unacceptable levels” of increased fiscal risk.
The companies fall under the Department of Public Enterprises. Last week, President Cyril Ramaphosa announced that a “holding company” would be established to house all entities and exercise shareholder oversight.
The Airports Company of SA (ACSA) had for the first time requested a bailout as the aviation industry ground to a halt due to the pandemic.
Government allocated R2.35bn to the entity in 2021.
Another company that sought funding for the first time was the state insurance entity, Sasria. Officials said the cash enabled the entity to settle valid claims and avoid insolvency.
Following the July 2021 unrest, Sasria received claims that were higher than anticipated, leading to deteriorated finances.
Sasria received R22 billion in 2022.
One of the worst and most underperforming entities, Denel, remains in a dire financial position.
The now-broken arms manufacturer has not issued financial statements for two years and depends on the state to continue operating.
It has still not been able to meet its financial obligations, such as payment of salaries, suppliers and tax obligations, Treasury officials said.
NOW READ: ‘Too late to save them’: South Africa’s SOEs broken beyond repair
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