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State-Owned Enterprises
BY Zia Haffejee
South Africa
24 June 2021
R 14 400.00 (ZAR)  
estimated $ 991.33 (USD) *
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State-owned Enterprises South Africa


The ongoing financial and operational crises faced by a number of major state-owned enterprises (SOEs) casts doubt on their practicality and survival. Total SOE debt stands at a staggering R692.9bn. The most recent budget review indicated that SOEs have reported poor growth, high costs and elevated debt servicing costs, and several appear to be at risk of defaulting on their debts. Prospective reforms and increasing private-sector participation provide some hope for South Africa’s SOEs.


Corruption


The Zondo Commission of Inquiry into allegations of state capture in the public sector, including organs of state, has outlined corruption at the highest echelons of entities such as Transnet, Eskom, SAA and Denel and provides some explanation for the extent of the financial mismanagement at these enterprises. The poor performance of SOEs continues to reflect crumbling infrastructure, poor and ever-changing leadership, corruption, wasteful expenditure and mismanagement of funds.


Major Changes


The government announced in June that it plans to sell 51% of South African Airways to a private consortium and that it would retain a minority stake. The proposed sale will amount to the first privatisation in decades and represents a major shift from the state’s stance on SOE control and ownership. Government will also now permit independent power producers to increase self-generation without obtaining a licence from 1MW to 100MW. Both announcements represent a major shift in government’s stance and indicate an awareness of the SOEs’ limitations.


Report Coverage


This report focuses on South Africa’s major state-owned entities and includes information on the major enterprises, their performance and the factors that influence them including the pandemic, economic factors, their debt and performance levels and leadership issues. There are profiles of 24 public entities which include major SOEs such as Transnet, Eskom, South African Airways and Denel, and other entities under state ownership and control such as the Development Bank of Southern Africa and Independent Development Trust.


Page
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 5
4. STATE OF THE INDUSTRY 7
4.1. Local 7
4.1.1. Corporate Actions 10
4.1.2. Regulations 11
4.1.3. Socio-economic development 12
4.2. International 12
5. INFLUENCING FACTORS 13
5.1. Coronavirus 13
5.2. Economic Environment 14
5.3. State capture and corruption 15
5.4. Government guarantees and support 15
5.5. Environmental Concerns 17
5.6. Labour 19
6. COMPETITION 19
7. SWOT ANALYSIS 21
8. OUTLOOK 22
9. REFERENCES 22
9.1. Publications 22
9.2. Websites 23
APPENDIX 1 25
Summary of Notable players 25
COMPANY PROFILES 31
AIR TRAFFIC AND NAVIGATION SERVICES COMPANY LTD 31
AIRPORTS COMPANY SOUTH AFRICA SOC LTD 35
ALEXKOR SOC LTD 40
ARMAMENTS CORPORATION OF SOUTH AFRICA SOC LTD 43
BROADBAND INFRACO SOC LTD 46
DENEL SOC LTD 49
DEVELOPMENT BANK OF SOUTHERN AFRICA 54
ESKOM HOLDINGS SOC LTD 58
FINANCIAL SECTOR CONDUCT AUTHORITY 62
INDEPENDENT DEVELOPMENT TRUST 67
INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD 70
LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA 81
PASSENGER RAIL AGENCY OF SOUTH AFRICA 86
PETROLEUM OIL AND GAS CORPORATION OF SOUTH AFRICA SOC LTD (THE) 90
SEF SOC LTD 94
SOUTH AFRICAN AIRWAYS SOC LTD 98
SOUTH AFRICAN BROADCASTING CORPORATION SOC LTD 102
SOUTH AFRICAN FORESTRY COMPANY SOC LTD 107
SOUTH AFRICAN NUCLEAR ENERGY CORPORATION SOC LTD (THE) 111
SOUTH AFRICAN WEATHER SERVICE 115
SUID-AFRIKAANSE POSKANTOOR SOC LTD 119
TELKOM SA SOC LTD 123
TRANS-CALEDON TUNNEL AUTHORITY 127
TRANSNET SOC LTD 130