Defend Truth


South Africa’s toxic SOE bailout crisis and the struggle for basic services


Jan de Villiers is the DA’s Shadow Minister of Small Business Development.

The concept of a new state holding company that will rectify the operational and financial management issues in state-owned enterprises is both naïve and reckless. It is an unsuitable mechanism to ensure accountability, particularly when devoid of any profit incentive.

Picture South Africa’s public sector as a strung-out junkie, insatiably craving the next fix while the destitute masses at its feet plead for sustenance, shelter and education.

This is the grim scenario we confront as our ANC-led administration obsessively indulges in a destructive addiction to taxpayer-funded bailouts for state-owned enterprises (SOEs), leaving the impoverished to bear the brunt of government failure.

The lifeblood of our country – tax revenue generated by hard-working South Africans – is intended for distribution at municipal, provincial and national levels to deliver basic services to citizens. It is underprivileged and vulnerable South Africans who depend most heavily on this fundamental responsibility of government. Yet, the current administration continues to insist on redirecting funds towards failing SOEs, draining resources from where they are desperately required.

A mind-blowing R331.2-billion was allocated to SOE bailouts between 2013/14 and 2022/23, with a staggering 55% funnelled to Eskom alone. 

Imagine the schools, hospitals and homes that could have been constructed with those resources. Instead, corporate welfare has become a crutch for SOEs, perpetuating subpar management and operational inefficiencies.

This tale of abuse unveils the ANC as the enabler, supplying the drugs – bailouts, in this case – to the dependent SOEs. Rather than compelling rehabilitation, these injections of taxpayer capital merely guarantee their continued subpar performance and mismanagement.

Every concurrent bailout has contributed to the steady deterioration of the financial and operational performance of major SOEs. Inefficient corporate governance, obsolete business models and crippling cost structures have, as a consequence, taken root in each of these government entities. 

The ANC is well aware that taxpayers will incessantly shoulder the burden of its governance failures, resulting in a continued lack of motivation to enhance the management of these organisations.

Finance Minister Enoch Godongwana has even admitted that SOEs persist as a weight upon the national fiscus, as their daily operations have grown reliant on fiscal intervention from government. He has acknowledged that the performance of SOEs, development finance institutions and social security funds “remain inconsistent, but broadly negative”.

If this is the stark reality, why do we continue to squander precious resources on these moribund entities?

In a further move that is emblematic of the ANC’s proclivity for devising ill-advised policy initiatives, President Cyril Ramaphosa announced a new state holding company that will centralise the operations of South Africa’s commercial SOEs. This holding company will purportedly address the governance crisis engulfing our public sector.

Instead, contrary to the business-friendly approach promised by the so-called New Dawn campaign, the announcement by the Presidency continues to prioritise state control over the requisite structural market reforms that will create an environment that is attractive to private sector investment in the economy.

The concept of a new state holding company that will rectify the operational and financial management issues in SOEs is both naïve and reckless. It is an unsuitable mechanism to ensure accountability, particularly when devoid of any profit incentive. 

Naturally, the ANC endorses the initiative as it will function as another generous vehicle for the party’s cadre deployment campaign and an additional layer of bureaucracy through which maladministration can be concealed.

Expanding state intervention will not resolve any of the systemic issues plaguing the public sector. On the contrary, considering the severity of financial mismanagement in most SOEs, private sector expertise has become a crucial element to alleviate the financial burden on taxpayers imposed by SOEs. 

The government must therefore prepare the sector for increased private sector participation as a means to stave off financial ruin affecting these entities, in particular, Transnet, Eskom, SABC, Denel and Prasa.

Cabinet cannot continue to delay the inevitable collapse of SOEs in the misplaced hope that the public’s tolerance is endless and that obsolete organisations will eventually self-correct, turn profits and fund themselves from their own balance sheets.

Failure to act now by opening the sector to private sector investment will keep the country locked in an indefinite low growth trap and will hamper any attempt at stabilising the economy. 

The ANC must confront the sobering truth that endless bureaucracy and government handouts are not solutions.

It’s time to break the cycle of addiction, sever the supply, and demand better from our public entities. We need a government that prioritises its duty to serve the people of South Africa, rather than succumbing to its dependence on power and corruption.

We cannot stand idly by while the addicted giant wreaks havoc on our nation, devouring taxpayer money in a futile attempt to sustain its habit. 

We must demand better. DM


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  • Jane Crankshaw says:

    South Africa’s political economy is just a big washing machine. Taxpayers money is laundered through the SOE’s for the benefit of a few politically connected people who take it offshore to Dubai to dry in the sun! The same with ordinary peoples pensions laundered ( and stolen) through the PIC.
    These were lessons learnt by the ANC from being a member of BRICS.
    Until tax payers say “ enough” nothing will change.
    Just think of what this country could be if its resources were properly managed. Time for a change of government – the ANC hierarchy just don’t have what it takes but are very good at taking what they want for themselves!

  • Jane Crankshaw says:

    Good article…thanks x

  • Beyond Fedup says:

    Vert aptly put, Jane! You forgot to add Iqbal Surve after PIC.

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