And SOE it goes: As turnaround plans stumble, SABC is the latest entity to face financial point of no return
3 July 2019
The SABC’s current situation is typical of many SOEs. The attempt to sweep clean after the years of State Capture is proving both long-winded and costly.
The SABC board says a ‘communication blackout’ at the state broadcaster is ‘imminent’. With its debt building insurmountably, the SABC joins the queue of state-owned entities with begging bowls out to National Treasury. The progress in turning around SOEs – the Ground Zero of State Capture – has been slow and faltering, beset by rising debt, leadership challenges and ambivalence from the government.
With SABC board chair Bongumusa Makhathini telling the Sunday Times that staff salaries may not be payable at the end of June, the broadcaster is reported to be facing a complete “communication blackout” imminently if its financial situation does not improve.
In addition to its immediate cash flow problem, Makhathini said the SABC’s other greatest challenge is that it has not had the funding to “[maintain] any of our infrastructure”.
In publicly expressing the SABC’s challenges in such apocalyptic terms, the SABC board may be hoping to force the hand of National Treasury – which has since March 2019 been considering an application from the broadcaster for a R3.2-billion guarantee to enable it to raise funds from commercial banks.
Yet Treasury has revealed itself to have a limited appetite for plunging further cash into South Africa’s worst-performing SOEs, with Finance Minister Tito Mboweni making it known that he would prefer to see the likes of South African Airways sold off.
Eskom, as ever, is a different story – due to the dependence of the wider South African economy on the electricity provider’s fortunes.
When President Cyril Ramaphosa met with executives from about 20 SOEs to hear the state of play in early June, it was clear that there was substantial unhappiness with the relationship between the entities and government. Concerns raised included a desire for more clearly defined mandates; inadequate capitalisation; outdated regulatory environments; and more capable boards.
The SABC’s current situation is typical of many. The attempt to sweep clean after the years of State Capture is proving both long-winded and costly: the Sunday Times reports that Special Investigating Unit investigations into irregular tenders and salary awards have already built in a civil litigation bill of more than R366-million.
After years of a spending free-for-all at SOEs, both Treasury and Minister Pravin Gordhan’s Department of Public Enterprises have now tightened the reins to the point where those in new leadership positions complain that they are given too little room, too little trust, and too little money to manoeuvre effectively. The resignation of a number of top executives in the past months speaks to this frustration. Read the full article on Daily Maverick here.