ANC Government blows R280 billion on SOE bailouts for a return of only R1 million

Note to editors: Please find attached soundbite by Dr Mimmy Gondwe MP

The ANC government, under President Cyril Ramaphosa’s false ‘new dawn’, has not only failed to revive the moribund State Owned Enterprises (SOEs) sector but it has thrown hundreds of billions of rand into the SOE financial blackhole with no positive return for the South African taxpayers.

A reply to a DA parliamentary question has revealed that, over the past five years, the ANC government has spent R283 billion bailing out Eskom, Denel, Transnet, and SAA. In those five years, only SAFCOL has declared a R1 million dividend to the government shareholder. This is a shocking return on investment that exposes how the ANC government’s state led SOE model has collapsed public finances and exerted a heavy toll on the already overburdened taxpayers.

In the reply, the Minister of Public Enterprises, Pravin Gordhan tries to justify this wasteful expenditure as capital investment and not bailouts. He further contends that the expenditure was a necessary cost to carry because SOEs needed to be rescued from the damage done by state capture.

This argument is disingenuous because taxpayers did not have to carry this cost to begin with. If Ramaphosa was serious about SOE reform, he should have opened up the SOE sector to private investment and public/private partnerships from the beginning of his tenure. By sticking to outmoded system of full state control, the SOEs remained trapped in fault lines of structural inefficiency, unviable business models and lack of competitiveness.

Over the past five years the ANC government has been throwing good money at dysfunctional entities and naively hoping that this would fix SOEs. It has not, and after almost a quarter of a trillion in ‘capital investment’ – as Gordhan would have us believe, SOEs are still struggling as they were five years ago.

The prognosis is not good – Eskom is charging consumers high electricity tariffs to compensate for an old generation fleet that is now expensive to run, Transnet still has rail infrastructure problems and spawned a port crisis that threatened to torpedo the South African economy, SAA is now back into state control after it ditched an equity partner and Denel is yet to become financially viable.

It is unfortunate that the Ramaphosa administration has found a perfect scapegoat in state capture over its failure to free taxpayers from the bailout albatross that continues to hang over the fiscus. They conveniently forget to mention that they were as much a part of the Zuma administration when public assets were being looted and they failed to take action.

On 29 May, voters need to enter the voting booths fully aware that their money – which amounts to a quarter of a trillion rand, disappeared without a trace under the ANC government. They should vote to stop the ANC from wasting trillions more, because all the ANC ever wants is to keep SOEs on life support for the benefit of connected cadres.