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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.

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

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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

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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

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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.
Name Industry Notes Employees Revenue Profit/(Loss) Ownership type Established
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 Oceans R1.673bn[17] R0.067bn Fully state owned 1993
Airports Company South Africa (ACSA) Airport management Owner and operator of major airports. 3,110 R2.86bn R0.23bn 74.6% state owned 1993
Alexkor Mining Diamond mining. 859[18] R0.2bn[18] R0.03bn Fully state owned 1992
Armscor (South Africa) Arms procurement Arms procurement agency for the SANDF. 1,467 R1.75bn R0.23bn Fully state owned 1968
Broadband Infraco Telecommunications Long distance & international internet connectivity. 166 R0.41bn (R0.01bn) Fully state owned 2007
Central Energy Fund Research & Development Energy development. Parent company of PetroSA. 2,107 R13.2bn (R0.45bn) Fully state owned 1954
Denel Arms procurement Armaments manufacturer. 3,968 R3.76bn (R1.75bn) Fully state owned 1992
Development Bank of Southern Africa Banking Funding for social and economic infrastructure. 492 R5.6bn R3.1bn Fully state owned 1983
Eskom Public utility Electrical production, transmission and distribution monopoly. 46,665 R179.8bn (R20.7bn)
 Fully state owned 1923
Independent Development Trust Social Development Supports education, housing, health services and business development projects (not profit-seeking) 279 R0.162bn (R0.107bn) Fully state owned 1990 (reconfigured 1999)
Industrial Development Corporation of South Africa Industrial Development Shareholder in numerous companies and subsidiaries R12.240bn (R3.bn) Fully state owned 1940
Land and Agricultural Development Bank of South Africa Agricultural Finance Development finance for farmers R5.032bn (R2.124bn) Fully state owned 1912
South African Broadcasting Corporation Broadcasting South African public service broadcaster 3,167 R6.4bn (R0.6bn) Fully state owned 1936
South African Express Transport Regional airline 980 Fully state owned 1994
South African Forestry Company Forestry Manages forestry on state owned land 2,363 R0.93bn (R0.08bn) Fully state owned 1992
South African Nuclear Energy Corporation Energy Manages the Pelindaba research reactor 1,400 R2.702bn (0.131bn) Fully state owned 1999 (in current form)
South African Post Office Postal services National postal services 18,119 R4.5bn (R0.9bn) Fully state owned 1991
South African Airways Transport International airline 10,071 R30.7bn (R5.4bn) Fully state owned 1934
Telkom SA Telecommunications National telephone monopoly 18,286 R41bn R4.9bn 55.3% state owned[19] 1991
Trans-Caledon Tunnel Authority Public utility Water transport authority 141 R2.3bn R2.1bn Fully state owned 1986
Transnet Transport Railways, harbours, oil/fuel pipelines and terminals 55,946 R74bn R6.04bn Fully state owned 1990
List of other large South African public entities (Schedule 3) and companies in which the state is a shareholder. FY2019/2020 Data.
Name Industry Notes Employees Revenue Profit/(Loss) Ownership type Established
Council for Scientific and Industrial Research Research & Development National research organisation 3,000 R2.5bn R0.007bn Fully state owned 1945
Passenger Rail Agency of South Africa Railways Passenger railway services 16,350 R13.65bn (R1.69bn) Fully state owned 1990
PetroSA Energy National oil and gas company 1,594 R10.3bn (R1.6bn) Fully state owned 1965
PBMR Research & Development Development of Pebble Bed Modular Reactor nuclear energy technology 900 1994
Rand Water Public utility Water utility for Gauteng province. 3,411 R13.4bn R3.15bn Fully state owned 1903
Sasol Energy International coal-liquefaction, petroleum refining and distribution. 30,100 US$21.7bn US$3.11bn 27.3% state owned (mostly indirectly through the government employees pension fund) 1950
Sentech Telecommunications Telecommunications infrastructure 531 R1.4bn R0.18bn Fully state owned 1996
South African National Parks Nature conservation Owner and operator of national parks. 4,181 R2.6bn R0.2bn Fully state owned 1926
South African National Roads Agency Infrastructure Maintenance and development of the national road network 397 R3,6bn R1.01bn Fully state owned 1998
Vodacom Telecommunications Cellular services 7,554 R86.4bn R24.5bn 13.9% state owned[19] 1994

Full list

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

  • Accounting Standards Board
  • Agricultural Research Council (ARC)
  • Air Traffic and Navigation Services Company
  • Airports Company South Africa (ACSA)
  • Alexkor Limited
  • Armaments Corporation of South Africa (ARMSCOR)
  • Blind SA
  • Brand South Africa
  • Breede-Gouritz CMA
  • Broadband Infraco
  • Broadcasting Complaints Commission of South Africa (BCCSA)
  • Cape Town International Airport
  • Central Energy Fund (CEF)
  • Commission for Conciliation, Mediation and Arbitration
  • Commission for Employment Equity
  • Companies and Intellectual Property Commission (CIPC)
  • Compensation Fund
  • Competition Commission (The)
  • Competition Tribunal
  • Council for Geoscience
  • Council for Medical Schemes
  • Council on Higher Education
  • Denel (Pty) Ltd
  • Development Bank of Southern Africa (DBSA)
  • Eskom
  • Estate Agency Affairs Board (The)
  • Export Credit Insurance Corporation of South Africa (Ltd.)
  • Film and Publication Board (FPB)
  • Financial Sector Conduct Authority (FSCA)
  • Free State Development Corporation 
  • Freedom Park
  • Government Employees Medical Scheme (GEMS)
  • Government Employees Pension Fund (GEPF)
  • Health and Welfare Sector Education and Training Authority (HWSETA)
  • Health Professions Council of South Africa (HPCSA)
  • Housing Development Agency (HDA)
  • Human Sciences Research Council (HSRC)
  • Independent Development Trust
  • Industrial Development Corporation [Ltd] (IDC)
  • Ingonyama Trust Board
  • Institute of People Management (IPM)
  • Ithala Development Finance Corporation (Ltd)
  • Khula Enterprise Finance (Ltd)
  • King Shaka International Airport
  • Land Bank and Agriculture Bank of South Africa [ Land Bank ]
  • Legal Aid South Africa
  • Limpopo Economic Development Enterprise
  • Media Development and Diversity Agency (MDDA)
  • Mhlathuze Water
  • Mining Qualification Authority
  • Mintek (Council for Mineral Technology)
  • National Advisory Council on Innovation (NACI)
  • National Agricultural Marketing Council
  • National Archives of South Africa (NASA)
  • National Arts Council of South Africa (NACSA)
  • National Consumer Commission (The) (NCC)
  • National Credit Regulator (NCR)
  • National Development Agency (NDA)
  • National Economic Development and Labour Council (NEDLAC)
  • National Electronic Media of South Africa (NEMISA)
  • National Empowerment Fund
  • National Energy Regulator (NERSA)
  • National Film and Video Foundation
  • National Gambling Board of South Africa
  • National Home Builders Registration Council (NHBRC)
  • National House of Traditional Leaders 
  • National Housing Finance Corporation (NHFC)
  • National Lotteries Commission
  • National Nuclear Regulator (NNR)
  • National Peace Accord Trust (NPAT)
  • National Ports Authority (NPA)
  • National Student Financial Aid Scheme (NSFAS)
  • National Transmission Company of South Africa (NTCSA)
  • National Youth Development Agency (NYDA)
  • Nelson Mandela Museum
  • North West Development Corporation
  • OR Tambo International Airport
  • Passenger Rail Agency of South African (PRASA)
  • Pebble Bed Modular Reactor (Pty) Limited (PBMR)
  • Perishable Products Export Control Board
  • PetroSA (Pty) Ltd
  • Private Security Industry Regulatory Authority (PSIRA)
  • Public Investment Corporation (PIC)
  • Rand Water
  • Refugee Appeal Board
  • Road Accident Fund (RAF)
  • Road Traffic Infringement Agency (RTIA)
  • Road Traffic Management Corporation (RTMC)
  • Robben Island Museum
  • Safety and Security, Sector Education & Training Authority (SASSETA)
  • Small Enterprise Development Agency (SEDA)
  • Small Enterprise Finance Agency (SEFA)
  • South African Agency For Science and Technology Advancement (SAASTA)
  • South African Airways (SAA)
  • South African Broadcasting Corporation (SABC)
  • South African Bureau of Standards (SABS)
  • South African Civil Aviation Authority
  • South African Council for Educators (SACE)
  • South African Council for Social Service Professions (SACSSP)
  • South African Diamond and Precious Metals Regulator
  • South African Express
  • South African Forestry Company (Ltd) (SAFCOL)
  • South African Heritage Resources Agency
  • South African Institute for Drug-Free Sport
  • South African Library for the Blind
  • South African Local Government Association (SALGA) 
  • South African National Accreditation System
  • South African National Council for the Blind
  • South African National Parks (SANParks)
  • South African National Road Agency
  • South African Nuclear Energy Corporation SOC Ltd (NECSA)
  • South African Post Office (SAPO)
  • South African Qualifications Authority (SAQA)
  • South African Reserve Bank (SARB)
  • South African Social Security Agency (SASSA)
  • South African Special Risk Insurance Association (SASRIA)
  • South African State Theatre - Pretoria
  • South African Tourism
  • South African Veterinary Council
  • South African Weather Service (SAWS)
  • Special Investigating Unit (SIU)
  • State Information Technology Agency (SITA)
  • Tax Ombud: South Africa
  • Technology Innovation Agency
  • Telkom SA (Ltd)
  • Transnet (Ltd) 
  • Universal Service Agency and Access of South Africa
  • Water Research Commission (WRC)

See also

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References

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  1. ^ companies "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. Public Domain 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 (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. ^ a b "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. ^ a b "Alexkor Annual Report: 2018" (PDF). Alexkor. 31 March 2021.
  19. ^ a b "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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