South Africa's state-owned enterprises (SOEs) have accumulated enormous losses, and their financial positions have often depended heavily on government support. According to Francois Rodgers, the KwaZulu-Natal MEC for Finance, the country is not short of policies, commissions, turnaround plans, or diagnostic reports to address the issues. However, the question remains whether there is the political courage and institutional discipline to fix them.
Rodgers argues that a state-owned enterprise should not exist simply because it has always existed. State ownership is an instrument for delivering public value, and an SOE must serve a clear purpose, whether providing electricity, moving people and goods, delivering water, developing infrastructure, or supporting economic growth. The real debate is not simply whether an enterprise should be publicly or privately owned.
The MEC for Finance emphasizes that the fiscal consequences of continuously funding failing SOEs are substantial. Major state-owned companies have accumulated enormous losses, while improvements in their financial positions have often depended heavily on government support. A bailout may create breathing space, but it cannot substitute for reform.
Rodgers stresses that public financial support cannot be a blank cheque. Assistance should be conditional, transparent, time-bound, and linked to measurable reform. Accountability must follow authority, and boards cannot claim authority when decisions succeed but blame government when they fail. Executives cannot be rewarded while their institutions fail to deliver.
Good governance is critical to the success of SOEs, according to Rodgers. Boards must never become vehicles for political reward, and appointments should be transparent and competency-based, supported by due diligence and strict management of conflicts of interest. Institutions cannot execute multi-year strategies through revolving doors of acting appointments.
The KwaZulu-Natal MEC for Finance believes that prevention is always cheaper than rescue after collapse. Credible early-warning systems combining financial and operational information are needed to prevent financial distress from becoming a crisis. Not every SOE requires the same solution, and reform means stronger governance and management for some, while others may require restructuring, consolidation, or strategic partnerships.
Rodgers concludes that public confidence will not be restored through slogans, but trust returns when services work, infrastructure is maintained, competent people are appointed, public money is accounted for, and wrongdoing has consequences. The objective should not simply be to preserve state-owned enterprises but to make them worthy of public ownership.
Key points
- State-owned enterprises must serve a clear purpose and deliver public value.
- Public financial support for SOEs should be conditional and linked to measurable reform.
- Good governance and competent leadership are critical to the success of SOEs.
