What Are SOEs?
A State-Owned-Enterprise (SOE) Is a government entity that is established or nationalized by the national government or provincial government, by executive order or an act of legislation, in order to earn profit for the government, control the monopoly of the private sector entities, provide products and services to citizens at a lower price, implementation of government schemes and to deliver products and services to the remote locations of the country. The national government or provincial government has majority ownership over these state-owned enterprises. These state-owned enterprises are also known as public-sector undertakings in some countries. Defining characteristics of SOEs are their distinct legal form and possession of financial goals and developmental objectives (e.g., a state railway company may aim to make transportation more accessible and earn profit for the government), SOEs are government entities established to pursue financial objectives, and developmental goals.
How Many SOEs In South Africa?
700 SOEs
DPE has oversight responsibility in full or in part for six of the approximately 700 SOEs that exist at the national, provincial, and local levels: Alexkor (diamonds), Denel (military equipment), Eskom (electricity generation), Transnet (railway transport and pipelines) South African Express, South African Forestry
In South Africa, the Department of Public Enterprises is the shareholder representative of the South African Government with oversight responsibility for state-owned enterprises in key sectors. Some companies are not directly controlled by the Department of Public Enterprises but by various other departments. Further, not all state-owned entities are registered as companies.
State-owned enterprises play a significant role in the South African economy. In key sectors such as electricity, transport (air, rail, freight, and pipelines), and telecommunications, SOEs play a lead role, often defined by law, although limited competition is allowed in some sectors (i.e., telecommunications and air). The government’s interest in these sectors often competes with and discourages foreign investment.
The Department of Public Enterprises minister has publicly stated that South Africa’s SOEs should advance economic transformation, industrialization, and import substitution. DPE has oversight responsibility in full or in part for six of the approximately 700 SOEs that exist at the national, provincial, and local levels: Alexkor (diamonds), Denel (military equipment), Eskom (electricity generation), Transnet (railway transport and pipelines) South African Express, South African Forestry Company (SAFCOL) (forestry), South African Broadcasting Corporation. These seven SOEs employ approximately 105,000 people. The state’s share of the investment was 21% while private enterprise contributed 63% (government spending made up the remainder of 16%). The IMF estimates that the debt of the SOEs would add 13.5% to the overall national debt.