South Africa

Government keeps failing SOEs alive to steal from them

University of the Witwatersrand Professor Alex van den Heever said the government keeps many of South Africa’s state-owned enterprises (SOEs) alive because the “ANC and other political parties want to retain these organisations as cash cows”.

Van den Heever told the SABC that vested interests in many SOEs prevent them from being cut off from government support.

His comments come after a report was released saying that the South African Broadcasting Corporation (SABC) is facing financial collapse. It now requires further bailouts to avoid business rescue proceedings.

A Gauteng High Court also recently placed the South African Post Office (SAPO) into business rescue.

The SABC and SAPO are only two of many SOEs that are struggling financially.

“There are many vested interests, including criminal interests, tied to the ANC and other political parties that want to retain these organisations as cash cows,” Van den Heever said.

This is why the government has no real will to deal with failing SOEs but instead keeps them alive by constantly giving them taxpayer-funded bailouts.

Professor Alex van den Heever

According to Van den Heever, the central issue is that many SOEs do not have a purpose or reason to exist.

“You cannot have SOEs just because you like SOEs,” he said. Over the last three decades, the government’s approach towards SOEs has been wholly unsuccessful.

“The purpose of many of these organisations is a mystery because you do not need them. They are not serving any real public service.”

SOEs should only be necessary to solve specific problems where pure private activity is insufficient.

Instead, the government should reallocate resources away from SOEs whose services can be performed by the private sector towards those that serve a genuine public need.

The government should not be running all railways in South Africa, an airline, nor a Post Office, because multiple private sector alternatives can perform their functions more effectively.

Van den Heever said the solution is to privatise SOEs whose functions can be performed by private companies and let the government focus on its core functions which it is currently struggling with.


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