“Shape up or ship out” – government announces zero funding for SOEs

Finance Minister Enoch Godongwana says the future of state-owned enterprises will be determined by the value they create; and whether they can function effectively without government bailouts.

Delivering his maiden Budget Speech in Cape Town, Godongwana announced zero funding for SOEs, adding that National Treasury is set to outline criteria for their funding during the 2023/2024 financial year.

The Treasury Ministry says government has emphasised the need for SOEs to develop and implement sustainable turnaround plans.

“SOEs need to develop and implement sustainable turnaround plans. The future of our state-owned companies is under consideration by the Presidential State-Owned Enterprises Council. Some state-owned companies will be retained, while others will be rationalised or consolidated. This, Madam Speaker, is what we call tough love,” adds Godongwana.

Some SOEs financial standings

Eskom
The minister says Eskom has been provided with over R136 billion to date to pay off its debt, with a further R88 billion until 2025/2026.

“The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders. Any solution will be contingent on continued progress to reform South Africa’s electricity sector and Eskom’s own progress on its turnaround plan and its restructuring. We expect Eskom to take further steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply,” adds Godongwana.

SAA
Over R16-million rand was set aside for South African Airways in the 2020 medium term budget to settle state‐guaranteed debt and interest costs. Government says R14.6 billion of this amount has been paid to date, and the remaining R1.8 million is set to be paid in 2022/2023.

SABC
Losses suffered by the South African Broadcasting Corporation grew from R511.4 million in the 2019/2020 financial year to R530.2 million in 2020/2021.

In a bid to stabilise its finances, the SABC retrenched 600 workers and underwent a restructuring process from 2020 to 2021.

Meanwhile, Auditor-General Tsakani Maluleke says the SABC has continued to incur financial losses that have resulted in the company not generating sufficient cash flow to pay short-term debt.

The AG briefed Parliament’s Standing Committee on Public Account on the annual financial statement report of the SABC for the 2020 and 2021 financial year earlier this month.

The office of the AG says based on the current financial projections of the public broadcaster; it could take up to more than six years before it is financially stable.

Finance Minister Enoch Godongwana tables the 2022 Budget: