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    State-Owned Enterprises in South Africa 2022

    Yasmin Mahomedy | South Africa | 30 November 2022

    State-Owned Enterprises in South Africa 2021

    Zia Haffejee | South Africa | 24 June 2021

    State-Owned Enterprises in South Africa 2018

    Ebrahim-Khalil Hassen | South Africa | 18 July 2018

    State-Owned Enterprises in South Africa 2015

    Ebrahim-Khalil Hassen | South Africa | 16 November 2015

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    Report Summary Table of Contents
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    Report Coverage

    This report on state-owned companies in South Africa includes information on the SOE sector as a whole and major SOEs such as Eskom, Transnet, SAA, Denel and the Post Office. It includes information on the state of SOEs and their effect on the fiscus and the economy, state capture and corruption, government guarantees and support and regulations. There are profiles of 24 companies including the major SOEs mentioned above and others such as Airports Company South Africa, the Passenger Rail Agency, state-owned funding institutions such as the Industrial Development Corporation and the Land Bank and regulators such as the Financial Sector Conduct Authority.

    Introduction

    • State-owned enterprises (SOEs) play a critical role in South Africa’s economy as they are responsible for providing the infrastructure and services on which the economy depends including electricity, water, freight logistics, commuter transport and telecommunications. \r\n
    • Instead of being at the forefront of economic and social transformation, most SOEs have been associated with state capture, financial mismanagement and major governance failures due to weak accountability and inefficiency. \r\n
    • Some of the biggest and most important SOEs have not met their mandates due to underperformance and require regular bailouts from government. \r\n
    • In the fiscal year to end February 2021, direct transfers from the government to SOEs amounted to 1.6% of GDP compared to an average of 1% in the previous five fiscal years. \r\n
    • Over the past two decades, government has spent more than R308bn bailing out and recapitalising SOEs.

    Outlook

    • While reform of SOEs has been a major theme of government for many years, there is no evidence of improvement. \r\n
    • South Africa’s imminent grey listing may be the catalyst to accelerate reforms to counter corruption and enhance defences against fraud.\r\n
    • BNP Paribas said SOEs will keep acting as a drag on growth due to their impact on public finances and the quality of infrastructure.

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    State-Owned Enterprises in South Africa
    State-Owned Enterprises in South Africa 2022

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    State-Owned Enterprises in South Africa 2018-07-18

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    State-Owned Enterprises in South Africa 2015-11-16

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    Table of Contents

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    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 4
    2.2. Geographic Position 4
    2.3. Size of the Industry 5
    3. LOCAL 6
    3.1. State of the Industry 6
    3.2. Key Issues 18
    3.3. Corporate Actions 18
    3.4. Regulations 19
    3.5. Enterprise Development and Social Development 19
    4. AFRICA 20
    5. INTERNATIONAL 21
    6. INFLUENCING FACTORS 23
    6.1. State Capture and Corruption 23
    6.2. Economic Environment 25
    6.3. Government Guarantees and Support 27
    6.4. Labour 29
    6.5. Environmental Issues 32
    7. COMPETITIVE ENVIRONMENT 32
    7.1. Competition 32
    7.2. Ownership Structure of the Industry 33
    8. SWOT ANALYSIS 33
    9. OUTLOOK 34
    10. REFERENCES 35
    10.1. Publications 35
    10.2. Websites 35
    APPENDIX 1 36
    Summary of Notable Players 36
    COMPANY PROFILES 42
    Air Traffic and Navigation Services Company Ltd 42
    Airports Company South Africa SOC Ltd 46
    Alexkor SOC Ltd 51
    Armaments Corporation of South Africa SOC Ltd 53
    Broadband Infraco SOC Ltd 56
    Denel SOC Ltd 59
    Development Bank of Southern Africa 63
    Eskom Holdings SOC Ltd 66
    Financial Sector Conduct Authority 70
    Independent Development Trust 74
    Industrial Development Corporation of South Africa Ltd 76
    Land and Agricultural Development Bank of South Africa 87
    Passenger Rail Agency of South Africa 91
    Petroleum Oil and Gas Corporation of South Africa SOC Ltd (The) 95
    Sasria SOC Ltd 99
    SEF SOC Ltd 102
    South African Broadcasting Corporation SOC Ltd 106
    South African Forestry Company SOC Ltd 111
    South African Nuclear Energy Corporation SOC Ltd (The) 115
    South African Weather Service 119
    Suid-Afrikaanse Poskantoor SOC Ltd 124
    Telkom SA SOC Ltd 127
    Trans-Caledon Tunnel Authority 131
    Transnet SOC Ltd 134

    Report Coverage

    This report focuses on South Africa’s major state-owned entities and includes information on the major enterprises, their performance and the factors that influence them including the pandemic, economic factors, their debt and performance levels and leadership issues. There are profiles of 24 public entities which include major SOEs such as Transnet, Eskom, South African Airways and Denel, and other entities under state ownership and control such as the Development Bank of Southern Africa and Independent Development Trust.

    Introduction

    This report focuses on South Africa’s state-owned enterprises (SOEs). SOEs offer the state different capabilities than those afforded by its internal machinery. Their unique positioning in the private sphere invites a hybridised mandate to pursue the state’s commercial and developmental goals. The ongoing financial and operational crises faced by a number of major SOEs casts doubt on their practicality and survival. Total SOE debt stands at a staggering R692.9bn. The government has remained steadfast in its support, securing 60% of these debts with guarantees to the tune of R415.5bn. Promising prospective reforms and increasing private-sector participation in key arenas however illuminate the way forward and provide some hope for South Africa’s SOEs.

    Strengths

    • Commercial and political value to government is too great to abandon.
    • Departmental support from ministerial portfolios.
    • Financial support from government in the form of loans and guarantees.
    • Market dominance.
    • Policy-making with SOE revitalisation as its goal.

    Weaknesses

    • Historical mismanagement has placed many SOEs in financial and operational crises.
    • Lack of clarity regarding governmental oversight in present regulatory regime.
    • Lack of leadership development to create suitable candidates who can meet the complex demands of leading an SOE.
    • Outdated business models.

    Opportunities

    • Effective private sector participation in weak areas could invite greater investment and technological development.
    • Prospective legislation could provide the clarity required to strike the appropriate balance of invested governmental oversight.
    • Restructuring and streamlining done correctly could create SOEs that better respond to modern markets.

    Threats

    • Corruption.
    • Government’s reluctance to allow comprehensive private sector participation for fear of losing political leverage in key areas.
    • Restructuring efforts could be hampered by protracted political processes and agendas.

    Outlook

    Government’s efforts to resuscitate failing SOEs over the past decade, through exorbitant financial guarantees, gives little ground for optimism. The sheer size of an entity like Eskom, in terms of its mandate and political significance, suggests that government may not permit it to fail despite its enormous debt, and at great peril to the economy. Similar logic can be applied to other large SOEs. However, recent developments in the sector tentatively restore some hope for its future.\r\n\r\nThe incomplete work of the State Capture Commission has already gone some way towards rooting out historical corruption at major SOEs. The national executive’s efforts to centralise major SOEs in its long-term development plans with tailored strategies to rationalise and re-harness them, bears some promise, should they be diligently pursued alongside the prospective framework legislation. Government’s acknowledgement of the unviability of the likes of Denel, Transnet and Eskom, and an ostensible willingness to engage in formal restructuring, also bodes well. \r\n\r\n The new 100MW cap on self-generation afforded to IPPs, and the majority-stake sale of SAA to a private entity, suggest a changing landscape. These developments could point towards a trend of increasing governmental flexibility in respect of the ownership and control of SOEs and their affairs, terrain which the government has historically kept well-guarded. Whether the government will make similar concessions beyond these unprecedented moves, where the private sector is able and willing to intervene in constrained SOE operations, remains to be seen.\r\n\r\nGondo is cautiously optimistic about the prospective changes, should they be actually be implemented. He says: “SOEs have been at the heart of South Africa’s fiscal slippage, and for a longer while, they have been a binding, supply-side constraint to achieving better growth dynamics and competitiveness in South Africa. Therefore, when we talk about structural reforms in South Africa, we are necessarily talking about SOE reforms”.\r\n

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    State-Owned Enterprises in South Africa
    State-Owned Enterprises in South Africa 2021

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    State-Owned Enterprises in South Africa 2022-11-30

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    State-Owned Enterprises in South Africa 2018-07-18

    R 1 900.00(ZAR) estimated $105.06 (USD)*

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    State-Owned Enterprises in South Africa 2015-11-16

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 2
    2.2. Geographic Position 5
    3. SIZE OF THE INDUSTRY 5
    4. STATE OF THE INDUSTRY 7
    4.1. Local 7
    4.1.1. Corporate Actions 10
    4.1.2. Regulations 11
    4.1.3. Socio-economic development 12
    4.2. International 12
    5. INFLUENCING FACTORS 13
    5.1. Coronavirus 13
    5.2. Economic Environment 14
    5.3. State capture and corruption 15
    5.4. Government guarantees and support 15
    5.5. Environmental Concerns 17
    5.6. Labour 19
    6. COMPETITION 19
    7. SWOT ANALYSIS 21
    8. OUTLOOK 22
    9. REFERENCES 22
    9.1. Publications 22
    9.2. Websites 23
    APPENDIX 1 25
    Summary of Notable players 25
    COMPANY PROFILES 31
    AIR TRAFFIC AND NAVIGATION SERVICES COMPANY LTD 31
    AIRPORTS COMPANY SOUTH AFRICA SOC LTD 35
    ALEXKOR SOC LTD 40
    ARMAMENTS CORPORATION OF SOUTH AFRICA SOC LTD 43
    BROADBAND INFRACO SOC LTD 46
    DENEL SOC LTD 49
    DEVELOPMENT BANK OF SOUTHERN AFRICA 54
    ESKOM HOLDINGS SOC LTD 58
    FINANCIAL SECTOR CONDUCT AUTHORITY 62
    INDEPENDENT DEVELOPMENT TRUST 67
    INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD 70
    LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA 81
    PASSENGER RAIL AGENCY OF SOUTH AFRICA 86
    PETROLEUM OIL AND GAS CORPORATION OF SOUTH AFRICA SOC LTD (THE) 90
    SEF SOC LTD 94
    SOUTH AFRICAN AIRWAYS SOC LTD 98
    SOUTH AFRICAN BROADCASTING CORPORATION SOC LTD 102
    SOUTH AFRICAN FORESTRY COMPANY SOC LTD 107
    SOUTH AFRICAN NUCLEAR ENERGY CORPORATION SOC LTD (THE) 111
    SOUTH AFRICAN WEATHER SERVICE 115
    SUID-AFRIKAANSE POSKANTOOR SOC LTD 119
    TELKOM SA SOC LTD 123
    TRANS-CALEDON TUNNEL AUTHORITY 127
    TRANSNET SOC LTD 130

    Report coverage

    The report on South African SOCs focuses on current conditions, highlighting underperforming entities, governance failures and the possibility of privatisation in the SOC sector. The report profiles 24 of the major SOCs, including South African Airways (SAA) which during 2017 was recapitalised to the tune of R13.7bn, and the South African Post Office (SAPO) which received R3.7bn from government. Also profiled is the Development Bank of Southern Africa t/a DBSA, which seeks to \"accelerate sustainable socio-economic development and improve the quality of life of the people of the Southern African Development Community (SADC) by driving financial and non-financial investments in the social and economic infrastructure sector.”\r\n

    Report coverage

    The report on South African SOCs focuses on current conditions, highlighting underperforming entities, governance failures and the possibility of privatisation in the SOC sector. The report profiles 24 of the major SOCs, including South African Airways (SAA) which during 2017 was recapitalised to the tune of R13.7bn, and the South African Post Office (SAPO) which received R3.7bn from government. Also profiled is the Development Bank of Southern Africa t/a DBSA, which seeks to \"accelerate sustainable socio-economic development and improve the quality of life of the people of the Southern African Development Community (SADC) by driving financial and non-financial investments in the social and economic infrastructure sector.”\r\n

    Introduction

    This report focuses on developments in State-Owned Corporations (SOCs), also known as State-Owned Enterprises (SOEs), which according to the National Treasury had assets of R1,225.2bn in the 2016/17 financial year. During the period under review, from November 2015 to March 2018, SOCs were accused of participating in large-scale corruption, which has been termed ‘state capture’. The importance of these entities being run ethically and efficiently is underlined by the crucial role that they play in sectors such as energy, transport, logistics and arms manufacturing.

    Strengths

    • Improving regulatory capacity.
    • State-Owned Corporations (SOCs) are supported by government.

    Weaknesses

    • Corporate governance remains weak in many SOCs.
    • Lack of clarity on roles and responsibilities and internal organisation is ineffective and inefficient.
    • Limited focus on bringing in new technological advances.
    • Operating within the fragmented shareholder model.

    Opportunities

    • Continued expansion into sub-Saharan Africa.
    • Crafting reform programmes that improve services, introduce new technology and create jobs.
    • SOCs will be part of discussions around “New Deal”.
    • State capture inquiry could provide the basis for strengthening transparency and support excellent financial management practices.

    Threats

    • Conflict between government, trade unions and business may slow down or even paralyse the reform programme.
    • Continued corruption remains a major problem in the SOC sector, with all the major SOCs facing challenges in this regard.
    • Technological progress means that many services provided by SOCs will have or already have substitutes.
    • The possibility of large SOCs defaulting on their debt.
    • Worsening economic climate and lack of investment in SOCs.

    Outlook

    Government is expected to continue to seek a strategic role for State-Owned Corporations (SOCs) to support the delivery of public services, resolve market failures and to create small businesses and employment. In the current context, SOCs however still face significant governance challenges and lack a strong enough balance sheet to drive the development process. Consequently, the current environment is characterised by efforts to raise funds needed to keep SOCs running and to strengthen governance. The picture is however more complex as arguments for greater private sector participation grows, especially in the energy and telecommunications sectors. SOC reform initiatives are likely to continue apace, given the seriousness of state capture, and a strong commitment from government to raise investment levels. These reforms are crucial if government is to reach the target set by President Cyril Ramaphosa of raising US$100bn in investment.

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    State-Owned Enterprises in South Africa
    State-Owned Enterprises in South Africa 2018

    Full Report

    R 1 900.00(ZAR) estimated $105.06 (USD)*

    Buy Now +

    Industry Landscape

    R 1 330.00(ZAR) estimated $ 73.54 (USD)*

    Buy Now +

    Historical Reports

    State-Owned Enterprises in South Africa 2022-11-30

    R 9 500.00(ZAR) estimated $525.29 (USD)*

    View Report Add to Cart

    State-Owned Enterprises in South Africa 2021-06-24

    R 1 900.00(ZAR) estimated $105.06 (USD)*

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    State-Owned Enterprises in South Africa 2015-11-16

    R 1 900.00(ZAR) estimated $105.06 (USD)*

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF THE INDUSTRY 1
    2.1. Industry Value Chain 2
    2.2. Geographic Position 3
    3. SIZE OF THE INDUSTRY 4
    4. STATE OF THE INDUSTRY 12
    4.1. Local 12
    4.1.1. Corporate Actions 18
    4.1.2. Regulations 19
    4.1.3. Enterprise Development and Social Economic Development 20
    4.2. Continental 21
    4.3. International 22
    5. INFLUENCING FACTORS 24
    5.1. Economic and Political Environment 24
    5.2. Labour 25
    5.3. Information Technology and/or Technology 27
    5.4. Environmental Concerns 28
    6. COMPETITION 28
    7. SWOT ANALYSIS 29
    8. OUTLOOK 30
    9. REFERENCES 31
    9.1. Publications 31
    9.2. Websites 32
    COMPANY PROFILES 33
    AIR TRAFFIC AND NAVIGATION SERVICES COMPANY LTD 33
    AIRPORTS COMPANY SOUTH AFRICA SOC LTD 36
    ALEXKOR SOC LTD 41
    ARMAMENTS CORPORATION OF SOUTH AFRICA SOC LTD 44
    BROADBAND INFRACO SOC LTD 47
    CEF (SOC) LTD 50
    DENEL SOC LTD 54
    DEVELOPMENT BANK OF SOUTHERN AFRICA 58
    ESKOM HOLDINGS SOC LTD 61
    FINANCIAL SECTOR CONDUCT AUTHORITY 66
    INDEPENDENT DEVELOPMENT TRUST 68
    INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD 71
    LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA 82
    PASSENGER RAIL AGENCY OF SOUTH AFRICA 87
    PETROLEUM OIL AND GAS CORPORATION OF SOUTH AFRICA SOC LTD (THE) 90
    SOUTH AFRICAN AIRWAYS (SOC) LTD 93
    SOUTH AFRICAN BROADCASTING CORPORATION SOC LTD 97
    SOUTH AFRICAN EXPRESS AIRWAYS (SOC) LTD 101
    SOUTH AFRICAN FORESTRY COMPANY (SOC) LTD 104
    SOUTH AFRICAN NUCLEAR ENERGY CORPORATION SOC LTD (THE) 107
    SOUTH AFRICAN WEATHER SERVICE 110
    SUID-AFRIKAANSE POSKANTOOR (SOC) LTD 112
    TELKOM SA SOC LTD 115
    TRANS-CALEDON TUNNEL AUTHORITY 120
    TRANSNET SOC LTD 122

    Report Coverage

    The report on South African SOCs focuses on the challenges faced by the state-owned entities, proposed legislation and possible measures to improve performance and stimulate economic growth. The report also profiles 12 of the major SOCs, including the Public Investment Corporation SOC Ltd (PIC), one of the largest investment managers in Africa, managing assets of over R1.8-trillion.

    Introduction

    This report focuses on developments in State-Owned Corporations (SOCs), also known as State-Owned Enterprises (SOEs) between July 2010 and October 2015. SOCs are companies owned by the state that provide a diverse range of product ranging from timber to electricity, and services ranging from running ports to providing credit to entrepreneurs. Importantly SOCs, especially in the energy and transport sectors, play crucial roles in value chains of all large companies in South Africa. However, most of the country’s SOCs continue to experience significant problems and reforms in the sector are urgently needed. This report provides a cross-cutting perspective of South Africa’s SOC sector focusing on large SOCs such as Eskom and Transnet, which together have an asset base value of R745bn.

    Strengths

    • Commitment from government to reform the sector.
    • Improving regulatory capacity.

    Weaknesses

    • Corporate governance remains weak in many SOCs.
    • Lack of clarity on roles and responsibilities and internal organisation is ineffective and inefficient.
    • Limited focus on bringing in new technological advances.
    • Operating within the fragmented shareholder model.

    Opportunities

    • Ability to solve market failures in credit and insurance markets may lead to improved economic participation.
    • Alignment with other Government policy departments, for example, the DPE and Department of Energy working more closely together on energy policy.
    • Development of a new organisational model and functional structure in line with the strategic objectives set for the new Medium-Term Expenditure Framework (MTEF).
    • New legislation that improves the corporate governance framework.
    • Opportunities for public-private partnerships.

    Threats

    • Continued corruption remains a major problem in the SOC sector, with each of the major SOCs facing challenges in this regard.
    • Rise of new technologies that could replace SOCs’ services

    Outlook

    Government is expected to continue placing SOCs at the centre of the economic development process, looking to it to provide public services, to resolve market failures and to create employment. The faith that government has in the role of SOCs to solve societal problems however is being questioned, given the current performance of larger SOCs. In resolving this gap between the vision for SOCs in the economy on the one hand and the reality of performance on the other, government is presently undertaking a reform process intended to identify and resolve the major challenges facing SOCs in South Africa.

    Read More..
    State-Owned Enterprises in South Africa
    State-Owned Enterprises in South Africa 2015

    Full Report

    R 1 900.00(ZAR) estimated $105.06 (USD)*

    Buy Now +

    Industry Landscape

    R 1 330.00(ZAR) estimated $ 73.54 (USD)*

    Buy Now +

    Historical Reports

    State-Owned Enterprises in South Africa 2022-11-30

    R 9 500.00(ZAR) estimated $525.29 (USD)*

    View Report Add to Cart

    State-Owned Enterprises in South Africa 2021-06-24

    R 1 900.00(ZAR) estimated $105.06 (USD)*

    View Report Add to Cart

    State-Owned Enterprises in South Africa 2018-07-18

    R 1 900.00(ZAR) estimated $105.06 (USD)*

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    Table of Contents

    [ Close ]
    PAGE
    1. INTRODUCTION 1
    2. DESCRIPTION OF INDUSTRY 1
    2.1. Industry Value Chain 2
    2.2. Geographic Position 3
    3. SIZE OF INDUSTRY 4
    4. STATE OF THE INDUSTRY 6
    4.1. Local 6
    4.1.1. Corporate Actions 8
    4.1.2. Regulations 10
    4.1.3. Enterprise Development and Social Economic Development 11
    4.2. Continental 12
    4.3. International 14
    5. INFLUENCING FACTORS 15
    5.1. Economic Environment 15
    5.2. Labour Resources 17
    5.3. Technology, Research and Development (R&D) and Innovation 19
    5.4. Environmental Concerns 20
    6. COMPETITION 20
    7. SWOT ANALYSIS 22
    8. OUTLOOK 23
    9. REFERENCES 23
    9.1. Publications 23
    9.2. Websites 24
    COMPANY PROFILES 25
    ALEXKOR SOC LTD 25
    DENEL SOC LTD 28
    ESKOM HOLDINGS SOC LTD 34
    INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD 38
    PASSENGER RAIL AGENCY OF SOUTH AFRICA 44
    PETROLEUM OIL AND GAS CORPORATION OF SA (SOC) LTD (THE) 48
    SOUTH AFRICAN AIRWAYS (SOC) LTD 51
    SOUTH AFRICAN BROADCASTING CORPORATION LTD 55
    SOUTH AFRICAN EXPRESS AIRWAYS (SOC) LTD 59
    SOUTH AFRICAN FORESTRY COMPANY (SOC) LTD 63
    SUID-AFRIKAANSE POSKANTOOR (SOC) LTD 66
    TRANSNET SOC LTD 69

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