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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 & pipelines) South African Express Airways, 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]

Contents

HistoryEdit

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 corruptionEdit

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.[15]

ListEdit

Non-complete list of South African government owned enterprises
Name Industry Notes Employees Revenue Profit/(Loss) Ownership type Established
Airports Company of South Africa (ACSA) Airport management Owner and operator of major airports. Fully government owned 1993
Alexkor Mining Diamond mining. 859[16] R208ml[16] Fully government owned 1992
Armscor (South Africa) Arms procurement Arms procurement agency for the SANDF. 1,641 R1.67bn 1968
Broadband Infraco Telecommunications Long distance & international internet connectivity.
Council for Scientific and Industrial Research Research & Development 3,000 1945
Central Energy Fund Research & Development Energy development.
Denel Arms procurement Armaments manufacturer. 7,634 R3.92bn Fully government owned 1992
Development Bank of Southern Africa Banking Funding for social and economic infrastructure. 600 R2.6bn Fully government owned 1983
Eskom Public utility Electrical production, transmission and distribution monopoly. 48,628 R177.5bn (R20.7bn)
Majority government owned 1923
National Parks Board Nature conservation Owner and operator of national parks. 4,027 Fully government owned 1926
PBMR Research & Development Development of Pebble Bed Modular Reactor nuclear energy technology 900 1994
Passenger Rail Agency of South Africa Railways Passenger railway services 16,119 R2.88bn Fully government owned 1990
PetroSA Energy National oil and gas company 1,594 R10.3bn (R1.6bn) 1965
Post Office Postal services 18,119 R4.5bn (R908ml) Fully government owned 1991
Rand Water Public utility Water utility for Gauteng province. 1903
Sentech Telecommunications Telecommunications infrastructure 1996
South African Airways Transport International airline 10,071 R30.7bn (R5.4bn) 1934
South African Broadcasting Corporation Broadcasting South African public service broadcaster R6.6bn (R622ml) Fully government owned 1936
SA Express Transport Regional airline 980 1994
South African Forestry Company Forestry Manages forestry on state owned land
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 49,078 R38bn Majority government owned 1990
Trans-Caledon Tunnel Authority Public utility Water transport authority
Telkom Austin 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
Sasol Energy International coal-liquefaction, petroleum refining and distribution. 30,100 US$21.7bn US$3.11bn 27.3% government owned[18] 1950

See alsoEdit

External websitesEdit

ReferencesEdit

  1. ^ "State Owned Companies", Department of Public Enterprises, Republic of South Africa. Retrieved 2017-01-28.
  2. ^ a b c "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. ^ a b c d "Commanding plights". The Economist. 27 August 2015. Retrieved 21 February 2018.
  4. ^ a b 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. ^ "EDITORIAL: How Eskom could cause a banking crisis". www.businesslive.co.za. Retrieved 2018-12-13.
  16. ^ a b "Alexkor Annual Report: 2018" (PDF). Alexkor. 31 March 2018.
  17. ^ a b "Here is Government’s shareholding in South African telecoms companies", mybroadband.co.za, 23 June 2015.
  18. ^ "Major shareholders", sasol.co.za. Retrieved 2017-01-28.