SOEs can once again drive economic growth and industrialisation – Cosatu

File photo of the Post Office in Mill Street in Gardens, Cape Town. Picture: David Ritchie/Independent Newspapers

File photo of the Post Office in Mill Street in Gardens, Cape Town. Picture: David Ritchie/Independent Newspapers

Published Mar 11, 2024


By Solly Phetoe

South Africans have correctly become exasperated by the challenges affecting the country’s State-owned enterprises (SOEs), frustrated by the impact on their lives and inability to be turned around.

Yet we should not in the midst of our daily irritations, forget the strategic role that SOEs once played in growing the economy, creating jobs, developing cutting--edge technology and spurring their respective sectors.

The backbone of South Africa’s industrialisation and transformation into the continent’s economic giant was not only built upon the mining industry but also the critical enabling roles played by Eskom and Transnet, bringing electricity to various economic sectors and communities and rolling out a massive railway network connecting rural farms to our cities and ports.

Needless to say that South Africa’s economic development ignored (to put it mildly) Africans, coloureds and Indians but the strategic industrial and economic role of the SOEs should not be ignored.

The South African Broadcasting Corporation (SABC) helped connect homes (who could afford it) to a wider world through TV and radio. The SA Post Office played a key role in allowing migrant workers to send money to their families in remote rural villages.

Denel, while arming the apartheid regime, helped develop the country’s military into one of the continent’s most well-armed with some of the world’s cutting-edge technology. South African Airways connected the nation to key sources of tourism and was recognised as Africa’s best airline.

The SOEs continued to play an important role beyond the 1994 democratic breakthrough with Eskom rolling out electricity to two thirds of the nation which had once been denied such basic rights. SABC has shifted from an apartheid propaganda machine to one respected across Africa and an anchor of public education.

Until a decade ago, SOEs were internationally recognised,, well-run SOEs that contributed to growing our economy and building the foundation for a democratic developmental state that would help lift millions from poverty.

Then the painful decade of state capture was unleashed. Competent management was replaced with enablers of brazen corruption. Resources were shifted from investing in infrastructure to the pockets of a greedy cabal. Criminal and fatally flawed contracts were entered into and at times theft on a grand scale was facilitated.

Workers at these SOEs paid the price going for months unpaid, thousands sent to the unemployment queues and those remaining fearful for job security.

Workers across the economy, businesses and communities have not escaped the devastation with load-shedding, endemic crime and corruption, sophisticated and brazen cable theft, stifling port congestion, the fiscus bled of scarce billions to fund bail outs and a weak economy.

While this decade will go down as a painful chapter in our post-1994 history, not all is lost.

In the beginning of 2023, load shedding peaked at 12 hours a day; with a R253 billion debt relief package for Eskom, ramped up maintenance, clamping down on criminal syndicates and competent management, we have seen load shedding fall to less than two hours a day.

Transnet has bled due to not only corruption, but also cable theft crippling freight rail and under investments in ports. This hurt our mining, manufacturing and agricultural sectors. Not only do they provide millions of jobs, but are also taxes that the state needs to fund the public services working-class communities and the economy require.

Denel is being rebuilt to once again not only provide the South African National Defence Force and other state security institutions with the material they require but also to be a key source of exports.

Though the progress initiated by government in securing, stabilising and rebuilding SOEs is welcome, they remain fragile and require further support if they are to return to not only a sustainable trajectory, but also to once again being the pillars of a robust industrialised economy capable of employing millions of South Africans.

Eskom’s progress, while commendable, remains under pressure due to ageing generation stations. Transnet and Metro Rail’s rail network requires urgent interventions to protect it from systemic cable theft. Ports require investments and modernisation to build on the recent improvements in reducing backlogs.

SABC, the SA Post Office and Postbank need competent and visionary management to pivot them to catch up with deep structural shifts in their sectors as the old models will not sustain them.

The SABC has to compete with digital platforms where young people watch shows and get their news on social media.

The Post Office needs to move from simply posting letters to entering the courier space, becoming a multi-service point for persons wanting to access government services, such as social grants, civic services and funding for SMMEs, etc.

The government has put in place a state bank aimed at consumers, the Postbank. To take off, it needs not only recapitalisation and skilled management, but also support from the state as its bank of choice.

Parliament has moved to amend legislation to enable this repositioning, including amendments to the Post Office and Postbank Acts.

South Africa is fortunate that the potential, the infrastructure, the market, the staff of all SOEs are largely there. If secured, invested in, repositioned and nurtured, can not only be placed on a sustainable path, but can help unlock our economy.

We are not the only country to stumble, fall and need to pick up the pieces. Others have done so successfully, including China, Vietnam, Malaysia, Singapore, Sweden and Norway.

We simply need to be focused, deal with those who break the law, invest in infrastructure and machinery, address workers’ fears and upgrade their skills, work with law enforcement institutions, provide the necessary support by the state and partner as needed with other role-players, public and private, in the sectors where they operate.

What we cannot afford is to simply give up. Nor can we simply abandon valuable economic assets to the scrapyard or send workers to the unemployment queue.

Solly Phetoe is Cosatu’s General Secretary.