Leading the debate in the National Council of Provinces on the negative impact of the bailouts giving to many of South Africa’s state-owned enterprises on frontline government departments, Mr Memory Booysen, a Member of the Western Cape legislature, pointed out that the budget deficits now affecting many government departments is a crisis that quietly, but profoundly affects everyone in our nation.
It is a crisis that risks the very core of our social services such as education, health and safety, Mr Booysen suggested. The crisis arises from the fact that the national government has for over a decade poured half a trillion rand into state-owned enterprises, bailing out corrupt, mismanaged and inefficient SOEs at the expense of critical service delivery services, he continued.
In his view, these bailouts “represent choices that government made to prioritise inefficiency over the urgent needs of its citizens”. This becomes unbearable, when one considers the R8.5 billion budget cut to frontline services that, for instance, the Western Cape Government has endured in successive financial years. This money could have been invested in 2 000 more teachers, which the province requires. It also is unable to expand hospital services or bolster the police services in the province.
Nonetheless, Mr Booysen was optimistic that the Government of National Unity will be able to instill a culture of accountability in these SOEs and will put the needs of its citizens over the endless cycle of SOE bailouts.
Mr Virgill Gericke (Economic Freedom Fighters) began his contribution to the debate by highlighting the important role that SOEs play in South Africa. “They are meant to uplift and empower and create economic opportunities for those who were grossly disadvantaged by apartheid and colonialism.” However, under the ANC the country has seen how SOEs have been “… run by politicians and officials as their personal properties with little regard to pieces of legislation that govern them”, Mr Gericke said. However, due to their important role in protecting “the social rights of vulnerable South Africans”, he was in favour of continued support for SOEs.
Ms Seeng Mokoena, and KwaZulu-Natal permanent delegate to the NCOP, was also concerned about the billions of rands that have been poured into Eskom and the South African Airways, with little to show for the money. Meanwhile, vital frontline services are left high and dry, she suggested. “Hospitals struggle to meet the demand for vital medical supplies, our schools are crumbling, while our police force is spread thinner and thinner on the ground.”
She also mentioned that the endless SOEs bailouts have pushed South Africa’s debt to gross domestic product to well over 70%. “[SOEs] are indeed a growing burden to the poor,” she said, echoing other speakers.
Mr Bino Farmer, a permanent delegate to the NCOP representing the Western Cape, also mentioned the important role SOEs have in leading the transformation agenda but all the bailouts have had the opposite effect. “SOEs have been viewed as drivers of corruption and nepotism, which made them not to be aligned with the developmental agenda of the state,” he said. There is now a conflict between them and the market-driven economy, which has hindered a partnership between public and private enterprises, he suggested.
Nonetheless, he agreed with some of the other speakers in the debate that SOEs should be supported, despite all their challenges.
The concept of SOE is central to the ANC vision of an inclusive, resilient and self-sustaining economy, said Northern Cape’s permanent delegate to the NCOP, Mr Solomon Mabilo. In this framework, SOEs are critical for social and economic transformation, and in driving growth in strategic sectors to provide essential services and equitable development, he added.
He criticised speakers preceding him in the debate, who were “preoccupied and pathologically entrapped in highlighting the SOEs that don’t perform optimally when there are well over 50 other SOEs that they do.” He mentioned the Passenger Rail Agency of South Africa as one of the SOEs that is slowly improving. The Council for Scientific and Industrial Research (CSIR), meanwhile, “is constantly coming up ground-breaking scientific approaches in addressing our country’s challenges”.
Mr Mabilo added, “The South African National Road Agency’s massive road infrastructure investment that has helped to facilitate economic growth is another case in point of SOEs that are preforming well. We are committed to the success of SOEs. The way forward is to ensure that their governance structures are free from corruption and undue influence.”
These entities remain a priority because they are also central to the Sustainable Development Goals to which our country is a signatory, Mr Mabilo pointed out. Their success is also crucial in facilitating the key public and private infrastructure investment partnership that will “foster innovation, assist in risk sharing and in alleviating the infrastructure investment burden from them”, he concluded.
Abel Mputing
7 November 2024
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