The content on this page is not written by Polity.org.za, but is supplied by third parties. This content does not constitute news reporting by Polity.org.za.

In response to a Democratic Alliance (DA) parliamentary question, the National Treasury has provided a list of the guarantees, loans and transfers it has provided to State Owned Entities (SOEs) over the past four financial years. In 2008/09 alone, the total amount of financial assistance provided was almost R200 billion. Considering that the budget deficit is expected to range up to R 100 billion (or 8.5% of GDP) as a worst case scenario, it is clear that halving the financial assistance to SOEs would save enough money to avert any budget deficit. The question is therefore not whether financial assistance should be given to these institutions, but how this unnecessary expenditure can be cut back. To illustrate the severity of the wastefulness of SOEs, the following table was compiled showing the grand total of financial support given to SOEs and the annual growth for this metric. It is striking that financial support to SOEs has jumped by more than 1000% - from R 16.6 billion in 2007/08 to the enormous R 199 billion in the following year.
2005/06 2006/07 2007/08 2008/09
Grand total of financial support in rand billion R 10.7 R 15.5 R 16.6 R 199.0
Annual growth in financial support 45.6% 6.8% 1099.2%

The financial burdens created by most of the SOEs are due to their poor management and corruption due to the ANC policy of cadre deployment, and there is no reason why taxpayers should be bailing them out year after year.

The list includes some of the most poorly run SOEs - SAA, SABC, Eskom, Alexkor - and, when the figures are read across a four year period, it demonstrates how the ANC government has increasingly mismanaged public money over time.

The table below shows the amount of transfers given to some SOEs over the past four financial years - a transfer is effectively a lump of cash that will never be paid back to the taxpayer, and since most of the transfers are unconditional, it means that there is zero accountability related to the use of these funds.

Transfers to SOEs in rand billion
2005/06 2006/07 2007/08 2008/09 Total
SABC R 180 R 235 R 239 R 180 R 834
South African post office R 300 R 351 R 364 R 522 R 1,537
South African Nuclear Energy Corporation R 256 R 356 R 388 R 554 R 1,554
Alexkor R 13 R 82 R 73 R 130 R 298
Denel R 2,000 R 567 R 933 R 3,500
Eskom R 783 R 893 R 1,018 R 2,694
South African Airways R 744 R 214 R 958
PBMR R 580 R 1,204 R 2,502 R 175 R 4,461
Sentech R 7 R 100 R 646 R 200 R 953
SABS R 103 R 126 R 139 R 142 R 510

In transfers alone, the SABC and SAA has received more than R 1.7 billion over the past four years, money that could've drastically changed the plight of homeless people: at R 54 000 per RDP house, this money could've paid for more than 33 000 homes, thereby placing an estimated 65 000 homeless people in new houses.

On the one hand, we have a series of ostensibly independent institutions, which receive a budget, have a staff structure and mandate but, in real terms, cannot deliver on their mandates, are undermined by staff that do not perform and fail to properly utilise their budgets. And so the Treasury is forced to act like a prop, holding up public institutions with money that should be better spent elsewhere - or not spent at all.

The expenditure on SOEs is going to be of crucial importance to fiscal sustainability in the coming years - now that South Africa is facing a budget deficit, everything needs to be done to cut back on wasteful spending. The DA will be calling for urgent measures in this regard; two concrete policy interventions come to mind:

• First, these institutions should be privatised. It is clear that the ANC government has neither the skills nor the appropriate attitude to properly manage their financial performance. There are repeat offenders and, very often, SOEs need to be bailed-out. This cost accrues to the taxpayer.

• Second, in the short run, a number of these institutions need urgent intervention in order to cut down on their dependence on government funds. A number of SOEs need sound financial management and skilled individuals who would be able to run these institutions, rather than political appointments that result in infighting and corruption.