State-owned enterprises of South Africa

In South Africa the Department of Public Enterprises is the shareholder representative of the South African Government[1] with oversight responsibility for state-owned enterprises in key sectors. Some companies are not directly controlled by the Department of Public Enterprises, but by various other departments.

State-owned enterprises play a significant role in the South African economy. In key sectors such as electricity, transport (air, rail, freight, and pipelines), and telecommunications, SOEs play a lead role, often defined by law, although limited competition is allowed in some sectors (i.e., telecommunications and air). The government’s interest in these sectors often competes with and discourages foreign investment.[2]

The Department of Public Enterprises minister has publicly stated that South Africa’s SOEs should advance economic transformation, industrialization and import substitution. DPE has oversight responsibility in full or in part for six of the approximately 700 SOEs that exist at the national, provincial, and local levels: Alexkor (diamonds), Denel (military equipment), Eskom (electricity generation), Transnet (railway transport and pipelines) South African Express, South African Forestry Company (SAFCOL) (forestry), South African Broadcasting Corporation and Transnet (transportation). These seven SOEs employ approximately 105,000 people. The SOEs share of the investment was 21% while private enterprise contributed 63% (government spending made up the remainder of 16%). The IMF estimates that the debt of the SOEs would add 13.5% to the overall national debt.[2]

History

Many state-owned firms were established during the apartheid era to counter the impact of international sanctions against the country.[3] The ANC government initially sold stakes in the companies, and lowered import tariffs. Those measures were reversed following opposition from COSATU and the South African Communist Party.[3] By 2007, an alliance of unions and leftist factions within the ANC had unseated President Thabo Mbeki, replacing him with Jacob Zuma.[3] The new ANC policy aimed at expanding the role of SOEs in the economy, following the example of China.[3]

Although in 2015 and 2016, senior government leaders discussed allowing private-sector investment into some of the more than 700 state-owned enterprises and recently released a report of a presidential review commission on SOE, which called for rationalization of SOEs, no concrete action has been taken on the topic yet.[2]

Financial troubles and corruption

By the end of the Zuma administration in 2018 corruption within South African state owned enterprises by individuals connected to government such as the controversial Gupta family had led to many enterprises facing deep financial difficulty.[4] Deepening financial issues and government bailouts of enterprises such as the South African Broadcasting Corporation,[5][6][7] South African Airways,[8][9][10] Eskom,[11][12] Denel[13][14] and Transnet caused increased public controversy. By the end of 2015/16 combined government guarantees on debts owed by state owned enterprises had reached R467 billion (equivalent to US$33.1 billion) and were expected to reach R500 billion by 2020 representing 10 percent of South Africa's GDP.[4] The situation at Eskom was regarded as so serious as to lead the South African business newspaper Business Day to speculate that it could cause a national banking crisis.[12]

List
Non-complete list of South African government owned enterprises. FY2018/2019 Data.
Name Industry Notes Employees Revenue Profit/(Loss) Ownership type Established
Airports Company South Africa (ACSA) Airport management Owner and operator of major airports. 3,110 R2.86bn R0.23bn 74.6% government owned 1993
Alexkor Mining Diamond mining. 859[15] R0.2bn[15] R0.03bn Fully government owned 1992
Armscor (South Africa) Arms procurement Arms procurement agency for the SANDF. 1,467 R1.75bn R0.23bn Fully government owned 1968
Broadband Infraco Telecommunications Long distance & international internet connectivity. 166 R0.41bn (R0.01bn) Fully government owned 2007
Council for Scientific and Industrial Research Research & Development National research organisation 3,000 R2.5bn R0.007bn Fully government owned 1945
Central Energy Fund Research & Development Energy development. Parent company of PetroSA. 2,107 R13.2bn (R0.45bn) Fully government owned 1954
Denel Arms procurement Armaments manufacturer. 3,968 R3.76bn (R1.75bn) Fully government owned 1992
Development Bank of Southern Africa Banking Funding for social and economic infrastructure. 492 R5.6bn R3.1bn Fully government owned 1983
Eskom Public utility Electrical production, transmission and distribution monopoly. 46,665 R179.8bn (R20.7bn)
 Fully government owned 1923
PBMR Research & Development Development of Pebble Bed Modular Reactor nuclear energy technology 900 1994
Passenger Rail Agency of South Africa Railways Passenger railway services 16,350 R13.65bn (R1.69bn) Fully government owned 1990
PetroSA Energy National oil and gas company 1,594 R10.3bn (R1.6bn) Fully government owned 1965
South African National Parks Nature conservation Owner and operator of national parks. 4,181 R2.6bn R0.2bn Fully government owned 1926
South African Post Office Postal services National postal services 18,119 R4.5bn (R0.9bn) Fully government owned 1991
Rand Water Public utility Water utility for Gauteng province. 3,411 R13.4bn R3.15bn Fully government owned 1903
Sasol Energy International coal-liquefaction, petroleum refining and distribution. 30,100 US$21.7bn US$3.11bn 27.3% government owned[16] 1950
Sentech Telecommunications Telecommunications infrastructure 531 R1.4bn R0.18bn Fully government owned 1996
South African Airways Transport International airline 10,071 R30.7bn (R5.4bn) Fully government owned 1934
South African Broadcasting Corporation Broadcasting South African public service broadcaster 3,167 R6.4bn (R0.6bn) Fully government owned 1936
South African Express Transport Regional airline 980 1994
South African Forestry Company Forestry Manages forestry on state owned land 2,363 R0.93bn (R0.08bn) Fully government owned 1992
South African National Roads Agency Infrastructure Maintenance and development of the national road network 397 R3,6bn R1.01bn Fully government owned 1998
Transnet Transport Railways, harbours, oil/fuel pipelines and terminals 55,946 R74bn R6.04bn Fully government owned 1990
Trans-Caledon Tunnel Authority Public utility Water transport authority 141 R2.3bn R2.1bn Fully government owned 1986
Telkom SA Telecommunications National telephone monopoly 18,286 R41bn R4.9bn 39.8% government owned[17] 1991
Vodacom Telecommunications Cellular services 7,554 R86.4bn R24.5bn 13.9% government owned[17] 1994

See also

External websites

References
  1. "State Owned Companies", Department of Public Enterprises, Republic of South Africa. Retrieved 2017-01-28.
  2. "South Africa - State Owned Enterprises". US State Department's Office of Investment Affairs. Retrieved 21 February 2018. This article incorporates text from this source, which is in the public domain.
  3. "Commanding plights". The Economist. 27 August 2015. Retrieved 21 February 2018.
  4. Mutize, Dr Misheck; Gossel, Sean. "Corrupt state owned enterprises lie at the heart of South Africa's economic woes". The Conversation. Retrieved 2018-12-13.
  5. "SABC in financial crisis, admits acting CEO". News24. 2017-05-10. Retrieved 2018-12-13.
  6. Sokutu, Brian. "Why Hlaudi mostly to blame for SABC financial crisis". The Citizen. Retrieved 2018-12-13.
  7. "Finances at SABC are so dire that it cannot pay content providers". www.businesslive.co.za. Retrieved 2018-12-13.
  8. "SAA in far deeper trouble | IOL Business Report". www.iol.co.za. Retrieved 2018-12-13.
  9. Bateman, Chris (2018-05-17). "SAA's full financial distress exposed – rehab starts". BizNews.com. Retrieved 2018-12-13.
  10. "South African Airways 'near bankruptcy'". BBC News. 2017-08-03. Retrieved 2018-12-13.
  11. "Bloated Eskom falls deeper into financial crisis – Natasha Mazzone - POLITICS | Politicsweb". www.politicsweb.co.za. Retrieved 2018-12-13.
  12. "EDITORIAL: How Eskom could cause a banking crisis". www.businesslive.co.za. Retrieved 2018-12-13.
  13. "Denel has a R2.34-billion debt problem - and no plan how to tackle it". www.timeslive.co.za. Retrieved 2018-12-13.
  14. "For Denel to survive, it needs partners, soon, warns Armscor's Kevin Wakeford". www.businesslive.co.za. Retrieved 2018-12-13.
  15. "Alexkor Annual Report: 2018" (PDF). Alexkor. 31 March 2018.
  16. "Major shareholders", sasol.co.za. Retrieved 2017-01-28.
  17. "Here is Government’s shareholding in South African telecoms companies", mybroadband.co.za, 23 June 2015.
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