State-owned enterprises of South Africa

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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. Further, not all state owned entities are registered as companies.

Contents

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. These seven SOEs employ approximately 105,000 people. The states 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 nationalization 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, mismanagement, maladministration 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] PRASA, [15] 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$33.1 billion) and were expected to reach R500 billion by 2020 representing 10 percent of South Africa's GDP. [4] The situation at Eskom was regarded as so serious as to lead the South African business newspaper Business Day to speculate that it could cause a national banking crisis. [12] In 2021 the South African Treasury reported that South African Airways had accumulated a total loss between 2008 and 2020 of R32 billion (US$ 2.1 billion) and received a total of R60 billion (US$ 4 billion) in government guarantees. [16]

Table list

The Public Finance Management Act distinguishes between three types of public entities. Schedule 1 entities compromise Constitutional Institutions including the Independent Electoral Commission and Public Protector among others. Schedule 2 entities are listed as Major Public Entities and have greater autonomy than Schedule 3 entities. Schedule 2 entities are listed below. Schedule 3 entities are subdivided into:

List of South African Schedule 2 Major Public Entities. FY2019/2020 Data.
NameIndustryNotesEmployeesRevenueProfit/(Loss)Ownership typeEstablished
Air Traffic and Navigation Services Company Air Traffic Control Manages air traffic and navigation within South Africa and part of the Southern Indian and Atlantic OceansR1.673bn [17] R0.067bnFully state owned1993
Airports Company South Africa (ACSA) Airport management Owner and operator of major airports.3,110R2.86bnR0.23bn74.6% state owned1993
Alexkor Mining Diamond mining.859 [18] R0.2bn [18] R0.03bnFully state owned1992
Armscor (South Africa) Arms procurement Arms procurement agency for the SANDF.1,467R1.75bnR0.23bnFully state owned1968
Broadband Infraco Telecommunications Long distance & international internet connectivity.166R0.41bn(R0.01bn)Fully state owned2007
Central Energy Fund Research & DevelopmentEnergy development. Parent company of PetroSA.2,107R13.2bn(R0.45bn)Fully state owned1954
Denel Arms procurementArmaments manufacturer.3,968R3.76bn(R1.75bn)Fully state owned1992
Development Bank of Southern Africa Banking Funding for social and economic infrastructure.492R5.6bnR3.1bnFully state owned1983
Eskom Public utility Electrical production, transmission and distribution monopoly.46,665R179.8bn(R20.7bn)
Fully state owned1923
Independent Development Trust Social DevelopmentSupports education, housing, health services and business development projects (not profit-seeking)279R0.162bn(R0.107bn)Fully state owned1990 (reconfigured 1999)
Industrial Development Corporation of South Africa Industrial DevelopmentShareholder in numerous companies and subsidiariesR12.240bn(R3.bn)Fully state owned1940
Land and Agricultural Development Bank of South Africa Agricultural FinanceDevelopment finance for farmersR5.032bn(R2.124bn)Fully state owned1912
South African Broadcasting Corporation Broadcasting South African public service broadcaster 3,167R6.4bn(R0.6bn)Fully state owned1936
South African Express TransportRegional airline980Fully state owned1994
South African Forestry CompanyForestryManages forestry on state owned land2,363R0.93bn(R0.08bn)Fully state owned1992
South African Nuclear Energy Corporation EnergyManages the Pelindaba research reactor1,400R2.702bn(0.131bn)Fully state owned1999 (in current form)
South African Post Office Postal servicesNational postal services18,119R4.5bn(R0.9bn)Fully state owned1991
South African Airways TransportInternational airline10,071R30.7bn(R5.4bn)Fully state owned1934
Telkom SA TelecommunicationsNational telephone monopoly18,286R41bnR4.9bn55.3% state owned [19] 1991
Trans-Caledon Tunnel AuthorityPublic utilityWater transport authority141R2.3bnR2.1bnFully state owned1986
Transnet TransportRailways, harbours, oil/fuel pipelines and terminals55,946R74bnR6.04bnFully state owned1990
List of other large South African public entities (Schedule 3) and companies in which the state is a shareholder. FY2019/2020 Data.
NameIndustryNotesEmployeesRevenueProfit/(Loss)Ownership typeEstablished
Council for Scientific and Industrial Research Research & Development National research organisation3,000R2.5bnR0.007bnFully state owned1945
Passenger Rail Agency of South Africa RailwaysPassenger railway services16,350R13.65bn(R1.69bn)Fully state owned1990
PetroSA EnergyNational oil and gas company1,594R10.3bn(R1.6bn)Fully state owned1965
PBMR Research & DevelopmentDevelopment of Pebble Bed Modular Reactor nuclear energy technology9001994
Rand Water Public utilityWater utility for Gauteng province.3,411R13.4bnR3.15bnFully state owned1903
Sasol EnergyInternational coal-liquefaction, petroleum refining and distribution.30,100 US$21.7bnUS$3.11bn27.3% state owned (mostly indirectly through the government employees pension fund)1950
Sentech TelecommunicationsTelecommunications infrastructure531R1.4bnR0.18bnFully state owned1996
South African National Parks Nature conservationOwner and operator of national parks.4,181R2.6bnR0.2bnFully state owned1926
South African National Roads Agency InfrastructureMaintenance and development of the national road network397R3,6bnR1.01bnFully state owned1998
Vodacom TelecommunicationsCellular services7,554R86.4bnR24.5bn13.9% state owned [19] 1994

Full list

There are currently 108 State Owned Enterprises in South Africa [20]

See also

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References

  1. ↑ companies "State Owned Companies", Department of Public Enterprises, Republic of South Africa. Retrieved 2017-01-28.
  2. 1 2 3 "South Africa - State Owned Enterprises". US State Department's Office of Investment Affairs. Retrieved 21 February 2018.PD-icon.svg This article incorporates text from this source, which is in the public domain .
  3. 1 2 3 4 "Commanding plights". The Economist. 27 August 2015. Retrieved 21 February 2018.
  4. 1 2 Mutize, Dr Misheck; Gossel, Sean (19 June 2017). "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 (31 October 2018). "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. 1 2 "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. ↑ Secrets, Open (2021-04-13). "UNACCOUNTABLE #23: How Prasa was looted and left for scrap". Daily Maverick. Retrieved 2022-03-23.
  16. ↑ "No more bailouts for SAA". The Mail & Guardian. 2021-05-06. Retrieved 2022-02-26.
  17. ↑ "ANNUAL FINANCIAL STATEMENTS AIR TRAFFIC AND NAVIGATION SERVICES SOC LIMITED" (PDF). 31 March 2020. Retrieved 30 January 2022.
  18. 1 2 "Alexkor Annual Report: 2018" (PDF). Alexkor. 31 March 2021.
  19. 1 2 "Here is Government’s shareholding in South African telecoms companies", mybroadband.co.za, 23 June 2015.
  20. ↑ "State-Owned Enterprises and other public institutions | South African Government". www.gov.za. Retrieved 2022-07-29.
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