SOEs are bleeding South Africa dry – and give nothing back

Despite spending billions of rands on bailouts for state-owned enterprises (SOE), the government has received almost nothing in return.

In parliament’s questions and replies, public enterprises minister Pravin Gordhan was asked to provide information on the bailouts that South Africa’s state-owned companies received versus the dividends they have paid back to the government.

According to the figures released by Gordhan, the government has pumped R233.6 billion in bailouts for its SOEs over the last five years whilst only receiving a dividend payout of R1 million from one SOE.

This means that the government’s return on equity for the past five years equates to 0.0004% for all SOEs under the Public Enterprises portfolio.

Despite subjecting the nation to higher stages of load shedding, Eskom received the lion’s share of government bailouts – R181.6 billion – over the last five years whilst paying out no dividends.

Eskom is set to receive further government support, with National Treasury providing the embattled power utility R254 billion in debt relief over the next three years.

“Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period. Government will finance the arrangement through the R66 billion baseline provision announced in the 2019 Budget, and R118 billion in additional borrowings over the next three years,” said finance minister, Enoch Godongwana

The second worst-performing SOE was South African Airways (SAA), which paid out no dividend and got R37.1 billion in bailouts.

Amidst its financial struggles, the government is trying to sell a 51% stake in SAA to the Takatso Consortium. Although the competition commission has recommended that its tribunal approve the deal , certain terms and conditions – including requiring some stakeholders from the Takatso Consortium to divest – have delayed proceedings.

Denel and Transnet also received billions in bailouts whilst declaring no dividend, with the latter receiving close to R6 billion over the last financial year.

Despite not declaring a dividend for the past five financial years, Alexkor did not receive any government bailouts.

The only SOE that paid out a dividend was SA Forestry Company Limited (SAFCOL), which paid out R1 million whilst receiving no government bailouts.

Eskom