By Simangazo Mokale
In August last year, President Cyril Ramaphosa met chairpersons and chief executives of State-Owned Enterprises (SOEs) to discuss accelerating the implementation of measures to ensure that these entities perform optimally and meet their constitutional mandate.
During the meeting, the President was upfront about the crucial role of SOEs in growing the economy, along with the importance of stabilising their finances and promoting good governance.
They discussed the recommendations of the Presidential State-Owned Enterprises Council (PSEC) which was established in 2020 to advise government on the reform, repositioning and revitalisation of SOEs. The meeting formed part of government’s reform agenda that started in 2018 to deal with the crippling legacy of state capture.
The State Capture Commission found that lack of accountability, compliance and transparency as well as appointment of unqualified people contributed to a decline in the operational and financial performance of many SOEs.
It is now just over a year since that meeting took place and we remain confident the target to turn around our SOEs is within reach. While we are not where we would like to be, we are seeing signs of recovery at SOEs such as Airports Company South Africa (ACSA), Denel, Eskom, and Passenger Rail Agency of South Africa (PRASA).
ACSA for instance, reported an increase of 16 percent in revenue to R7 billion for the 2023/24 financial year while profit after tax increased to R472 million for the same period, recovering from a loss of R466 million in 2022/23.
Similarly, Denel posted a profit of R390 million before interest and tax for the 2023/24 financial year while irregular expenditure dropped by a whopping 98 percent. This is a huge improvement considering that the company has been struggling since 2020. This positive trend is expected to improve going forward as the entity’s restructuring and hiring of experienced executives will soon be concluded.
Denel’s interim Chief Financial Officer Thandeka Sabela recently told Parliament's Standing Committee on Public Accounts (Scopa) that the process to appoint a permanent chief financial officer, a group chief executive and other critical posts is currently underway.
Furthermore, PRASA has succeeded in bringing back 80 percent of its passenger rail corridors, following widespread theft and vandalism during the COVID-19 lockdown. About 31 of the 40 rail corridors are now operational and the company has significantly increased the number of rail passengers over the past year.
By March this year, the company reached 40 million passengers compared to 15 million passengers a year earlier.
Notable progress has also been made at Eskom through the implementation of the Energy Action Plan at Eskom which has resulted in close to 200 consecutive days of uninterrupted power supply since 26 March 2024. This year, the company has for the first time in three years significantly increased its energy availability factor to over 63 percent. The Minister of Electricity and Energy Dr. Kgosientsho Ramokgopa attributed this huge improvement to better collaboration with original equipment manufacturers, aggressive maintenance and dedicated staff.
While we still have much to do to turnaround our SOEs, we are encouraged that we are moving in the right trajectory. We are confident that the foundation has been laid for SOEs to start playing a broader role in our economic recovery and more work is being done by the 7th Administration to improve their operational performance. Work is already underway to develop a new centralised ownership model for SOEs that will improve their performance.
While the task to improve the performance of SOEs will take time, we are determined to see it happen. It is the only way we can grow an inclusive economy and improve the lives of people.