SOEs’ downward spiral steeper

Unless you have been living under a rock for the past few years or have no concept of economics (some of our leftists and trade unionists qualify there), you will know SA’s state-owned enterprises (SOEs) are in dire financial straits. But, according to the latest analysis of parastatal financial figures and reports carried out by Moneyweb, the situation is even worse than many of us feared … and it’s getting worse.

This analysis shows that only eight of the 28 larger companies posted results that were not utterly shocking. The other 20 all have serious problems and most suffered larger losses than in previous years.

Only two, the Development Bank (DBSA) and South African National Parks (SANParks), posted results that shareholders would have been happy with if the entities were private companies.

Six have not published their results yet, with the worst offenders being South African Airways (SAA) and SA Express. Last year, parliament’s oversight committees, bankers and taxpayers were told by SAA management it suffered a loss of about R5.6 billion in the year to March 2018.

Nearly all the companies performed worse, with Eskom the biggest culprit with a loss of more than R20 billion. PetroSA, the Post Office and Prasa also posted significantly bigger losses.

The disappointing results are even worse than the figures show, given that a lot of the companies receive grants and subsidies from the government as well.

The grim assessment shows that the government’s attempts to rein in these inefficient behemoths are going nowhere. That’s probably because the ANC is too afraid of the unions to apply the harsh medicine needed – drastic job cuts or privatisation.

At SAA, the unions are threatening to ground the airline if planned job cuts go ahead, further worsening the crisis there.

It seems the downward spiral is just getting steeper.