Badly run SOEs are heading for ruin

Auditor-General Kimi Makwetu has painted a worrying picture of the finances of the SABC and the SA Post Office, saying both state-owned entities are at risk of collapse.

Makwetu said he was worried about the fate of many SOEs.

"For more than a quarter of them, there was significant doubt on whether they could continue their operations in future. These included the SABC, the Post Office and the Petroleum Oil and Gas Corporation of SA," the latest report showed.

"We are concerned about the losses incurred and other concerning financial indicators at the Armaments Corporation of SA, the SA Nuclear Energy Corporation and the Land and Agricultural Development Bank of SA group." Of this list, the SABC and the Post Office have grabbed the most headlines recently.

The SABC came under intense scrutiny during the controversial tenure of former chief operating officer Hlaudi Motsoeneng. The Post Office has gained renewed attention as it bids to take over the distribution of social grants to millions of poor South Africans.

In its latest report on state finances, the Auditor-General reveals that the Post Office spent R194-million in fruitless and wasteful expenditure, making it the worst offender in that category in 2016-2017. This compares with R7-million in 2015-2016. The Post Office was among the major transgressors in irregular spending, alongside the SABC and the Airports Company SA.

The total bill for irregular expenditure among SOEs came to R2.82-billion. The main contributors to that tally were:

Acsa - R1.169-billion (2015-2016: R134-million), 60% as a result of noncompliance with legislation.

Sapo - R719-million (2015-2016: R127-million), 45% due to noncompliance with procurement process requirements and 37% for not following competitive bidding or quotation processes.

SABC - R687-million (2015-2016: R764-million), 75% from not following competitive bidding or quotation processes.

"The number of SOEs with irregular expenditure decreased but the value increased to R2.884-billion, of which Acsa, the post office and the SABC were the main contributors."