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.
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:
Provincial Public Entities - which have a provincial focus and function as provincial agencies such as the Gautrain Management Agency and various provincial gambling and liquor boards;
