Public entities – state-owned companies (SOCs) and development finance institutes (DFIs) – play an instrumental role in implementing developmental policies and helping to drive South Africa’s infrastructure-led growth. They have the resources to change the development path of rural areas. A study by the Financial and Fiscal Commission (the Commission) assessed the extent to which public entities contribute to rural development.
The public entities selected were Eskom, Telkom, the South African Post Office (SAPO), Transnet, as well as the Land Bank, Development Bank of Southern Africa (DBSA), the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF). The study found that SOCs do not have a specific rural focus, unless such a focus is driven by their parent/sector department, and that investments by DFIs in rural areas is minimal and declining.
To enhance the rural development role of public entities, in order to align with government’s infrastructure-led growth strategy, the Commission recommends that a single champion for rural finance and development be designated, to guide and coordinate investments by DFIs in rural areas. In addition, Transnet should contribute to regional growth by connecting goods produced in rural areas to markets, SAPO should broaden its focus and become a one-stop shop in rural areas, and Telkom should improve its network infrastructure in rural areas.
Report by the Financial & Fiscal Commission
Enhancing the Role of Public Entities in Rural Development – Policy Brief 43.17 MB