State-owned enterprises of South Africa


In South Africa the Department of Public Enterprises is the shareholder representative of the South African Government 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, and telecommunications, SOEs play a lead role, often defined by law, although limited competition is allowed in some sectors. The government’s interest in these sectors often competes with and discourages foreign investment.
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, Denel, Eskom, Transnet South African Express, South African Forestry Company , South African Broadcasting Corporation and Transnet. These seven SOEs employ approximately 105,000 people. The SOEs share of the investment was 21% while private enterprise contributed 63%. The IMF estimates that the debt of the SOEs would add 13.5% to the overall national debt.

History

Many state-owned firms were established during the apartheid era to counter the impact of international sanctions against the country. 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. By 2007, an alliance of unions and leftist factions within the ANC had unseated President Thabo Mbeki, replacing him with Jacob Zuma. The new ANC policy aimed at expanding the role of SOEs in the economy, following the example of China.
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.

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. Deepening financial issues and government bailouts of enterprises such as the South African Broadcasting Corporation, South African Airways, Eskom,, Denel 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 and were expected to reach R500 billion by 2020 representing 10 percent of South Africa's GDP. 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.

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External websites