Financial and Fiscal Commission raises alarm over SOEs fiscal drag
Banele Ginidza
The Financial and Fiscal Commission (FFC) has sounded a clarion call to Parliament, highlighting alarming trends in the fiscal drag imposed by State-Owned Enterprises (SOEs).
In a recent presentation to the Portfolio Committee on Monitoring and Evaluation, the FFC revealed that direct government transfers to SOEs rose significantly from 1% of GDP in 2015/2016 to 1.6% in 2021/2022.
This stark upward trend raises pressing concerns over the sustainability of SOE funding and the need for urgent reforms.
The Commission's damning analysis underscores a decade-long commitment from the government, which, between 2008/2009 and 2019/2020, spent approximately R160 billion to bail out financially troubled SOEs.
The FFC's warnings come amid growing anxiety over the potential fiscal repercussions of the proposed National State Enterprises Bill, which it claims fails to adequately address long-standing governance and accountability concerns prevalent over the past 30 years.
"In the 2025 Budget, our analysis shows that between 2024/2025 and 2025/2026 total government contingent liability will rise by about R9.4 billion with the bulk of it being centred around Eskom, Independent Power Producers and Transnet," the FCC said.
The National State Enterprises Bill proposes the establishment of the State Asset Management Company to consolidate the State's shareholdings in SOEs with the State as the sole shareholder of a holding company.
The Commission emphatically stated its opposition to the Bill in its current form, labelling it inadequate in tackling issues of misuse of public funds and insufficient in providing measures for consequence management related to irregular and wasteful expenditure.
The FFC articulated a preference for establishing a holding company funded within the National Treasury's budget baseline, a proposal aiming to restore fiscal integrity in the management of SOEs.
"The Bill does not have provision on consequence management specifically in the irregular, wasteful and corrupt expenditure. Without that, SOEs may continue to be vulnerable to improper public fund practices," said the Commission.
"We are concerned about the clear lack of financial purpose in this Bill...and transparency as well. Our initial advice was that the shareholding company should be within Treasury."
Treasury appeared before the Portfolio Committee on Planning, Monitoring and Evaluation on Wednesday also expressing concerns on the potential of malfeasance in the Bill.
Committee members, especially uMkhonto WeSizwe Party MP, Mzwanele Manyi, outrightly rejected the Bill, citing the fiscal risks associated with establishing the holding company, particularly the significant funding requirement of R615 million.
Members of Parliament expressed scepticism regarding the feasibility of the innovative funding mechanisms proposed.
Treasury also highlighted critical issues, particularly the proposed non-application of the Public Finance Management Act (PFMA) to the holding company and its subsidiaries, which could undermine transparency and accountability in financial management.
Treasury cautioned that the centralisation model posed risks, such as increased political interference and the potential for State capture, emphasising the importance of ensuring that SOEs remained financially sustainable without undue reliance on public funds.
Committee members raised significant concerns about the centralisation issues presented in the Bill. They argued that a centralised model could lead to a lack of transparency and accountability, making it more vulnerable to corruption and political interference.
Members highlighted that consolidating oversight of SOEs under a single holding company might exacerbate existing vulnerabilities rather than mitigate them, potentially creating an environment where decision-making becomes opaque and less subject to scrutiny.
BUSINESS REPORT
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
4 days ago
- The Citizen
Gauteng MEC to visit Maponya Mall to assess ongoing tensions in public transport sector
Gauteng MEC to visit Maponya Mall to assess ongoing tensions in public transport sector Gauteng MEC for Roads and Transport, Kedibone Diale-Tlabela, will visit Maponya Mall on Thursday to assess ongoing tensions in the public transport sector, engage with affected stakeholders, and review the situation on the ground. This is according to the South African Government News Agency ( The visit follows a violent incident on Wednesday at the mall, allegedly involving taxi operators and e-hailing drivers, which resulted in one fatality and left two others injured. ALSO READ: One dead in suspected taxi violence at Maponya Mall In response to the growth of e-hailing services, President Cyril Ramaphosa signed an amended National Land Transport Act (NLTA) 5 of 2009 into law last year, allowing e-hailing operators to apply for operating licences in the same manner as other public transport providers. @sowetourbannews Community blocks roads following e-hailing violence at Maponya Mall, Soweto Protestors march in support of e-hailing drivers after a e-hailing driver was killed in a suspected taxi violence attack on August 13. Workers of Maponya Mall also came out in numbers in their uniform to join the protest. 📹: @ #maponyamall #klipspruit ♬ original sound – Soweto Urban News – Soweto Urban News The National Land Transport Act was originally presented to the president in 2020 but was returned to the National Assembly for reconsideration. The revised Bill updates the Act to reflect developments since its implementation, simplifies provisions, and resolves issues that have arisen. ALSO READ: WATCH: Community protests after the death and injuries of e-hailing drivers It also makes allowances for non-motorised and accessible transport and expands the minister's powers to introduce regulations and safety measures. The Gauteng Department of Roads and Transport continues to monitor the situation closely and aims to ensure the safety of commuters while maintaining order in the sector.
IOL News
4 days ago
- IOL News
Witness Throws Fraud Case into Disarray at Palm Ridge Court
Rushil Singh and Nishani Singh were accused of submitting fraudulent bank guarantees, allegedly issued by Stanbic Bank Ghana, to secure more than R150 million in credit facilities from Investec between 2017 and 2022. Image: Supplied The high-stakes fraud trial against businessman Rushil Singh took an unexpected turn on Wednesday when a key prosecution witness delivered testimony that appeared to contradict earlier claims, casting doubt on the foundation of the State's case. Appearing before Judge Venter at the Palm Ridge Specialised Commercial Crimes Court, the witness — who had submitted three affidavits detailing how Singh and his late sister, Nishani Singh, allegedly defrauded Investec Bank — conceded under cross-examination that there may have been no intention to commit fraud. Rushil Singh and Nishani Singh were accused of submitting fraudulent bank guarantees, allegedly issued by Stanbic Bank Ghana, to secure more than R150 million in credit facilities from Investec between 2017 and 2022. The pair were arrested in 2023 and have been in custody ever since. Nishani, who suffered from severe health complications, died on Saturday at Chris Hani Baragwanath Hospital while awaiting trial. Now, the witness's testimony threatens to upend the State's case entirely. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Affidavits Under Scrutiny During Wednesday's proceedings, the witness confirmed authoring three affidavits submitted to the State — all of which were accepted into the record by Judge Venter. While the affidavits outline how guarantees were submitted and how the bank was allegedly misled, the witness admitted they do not directly prove criminal intent.'These affidavits establish a prima facie case,' he said, 'but they do not show that the accused acted with intent to defraud.' He went further, explaining that the guarantees, which were meant to secure substantial loans, were represented as being backed by cash reserves held in Ghana by the Joint Investment Company (JIC). 'It made logical sense to assume the guarantees were backed by cash,' he told the court. Pressed by the defence on whether Rushil or Nishani Singh knowingly provided false guarantees, the witness replied, 'No.' He acknowledged that many of the email attachments used as evidence in the affidavits were genuine and not forged, a revelation that further weakens the prosecution's claim of fabricated documentation. Defence Seizes Opportunity The defence was quick to highlight inconsistencies in the witness's account, arguing that if the documentation was legitimate and the guarantees were presented in line with standard banking practices, then the case hinges on misunderstanding, not malice. 'This may be a case of reckless financial conduct, but not criminal fraud,' said the witness under questioning. With the State's star witness softening his earlier position, the defence believes the court may soon have little choice but to reconsider the charges against Rushil Singh. Calls for Inquiry Into Sister's Death Meanwhile, the death of Nishani Singh has sparked mounting public pressure for an independent investigation. She had been in visibly poor health during recent court appearances and was reportedly denied adequate medical care while in custody. Her death has raised uncomfortable questions about the treatment of pre-trial detainees in South Africa's prison system.'If this testimony holds, it means Nishani may have died while innocent,' a legal analyst told reporters outside court.
IOL News
4 days ago
- IOL News
Why investors are flocking to the Atlantic Seaboard: a compelling market opportunity
The Atlantic Seaboard is unaffordable to the average South Africa but still has major allure for high-end buyers and investors. "Those who don't will see their property values and rental revenues steadily decline over time." Observing a pattern among successful operators, Richard Marshall, whose company Nox Cape Town manages numerous Atlantic Seaboard properties, said: "The investors who thrive are those who budget 8-10% of rental income specifically for upkeep, split between routine work and emergency repairs. The company said this decline is not merely theoretical. It said in Cape Town's competitive luxury market, where guests readily compare properties online and post detailed reviews, even minor defects can trigger rating drops that impact booking frequency and achievable rates. Those who combine strategic property acquisition with systematic operational excellence are positioning themselves to capitalise on one of South Africa's most dynamic rental markets, Marshall said. According to Nox, the Atlantic Seaboard's skyline tells a story of transformation. It said from Camps Bay to Bantry Bay, construction cranes and renovation projects signal a market in evolution, as property owners race to capitalise on Cape Town's booming short-term rental sector. Yet, it added that beneath this surface activity lies a more complex reality. While renovation fever grips the coastline, a growing number of property investors are discovering that the real challenge is not acquiring premium real estate, but maintaining it profitably. Marshall said industry data suggests that property upkeep can consume 10% or more of rental income, with annual costs typically ranging between 1 to 2% of a property's total value. He said for an R8 million Atlantic Seaboard apartment, this translates to R80 000 to R160 000 annually in routine care expenses alone. He added that these figures become more daunting when considering the unique pressures facing short-term rental properties. 'Unlike traditional residential lettings, vacation rentals experience constant guest turnover, accelerated wear on fixtures and fittings, and heightened expectations for hotel-standard amenities. Add the coastal environment's salt air and wind exposure, and the challenge intensifies considerably.' Providing expert advice on how to avoid costly mistakes and ensure peace of mind when tackling a home renovation, the Master Builders Association Western Cape (MBAWC) said that renovating a home, whether adding a new bedroom, redoing the kitchen, or undertaking a full-scale makeover, is a major investment. It said that, done well, it can enhance not only the comfort and value of one's property but also one's daily life. Done poorly, however, it said this can result in unexpected costs, delays, disputes, or even dangerous workmanship. MBAWC said from budgeting and compliance to contracts and contractor selection, there is a lot homeowners need to get right from the very beginning. Nox said the challenge is particularly acute given the area's architectural heritage. It said many buildings in the Atlantic Seaboard date from the mid-20th-century art deco period, creating properties with character but also with ageing infrastructure requiring specialist attention. It said some owners have opted for complete demolition and reconstruction, whilst others pursue extensive renovation programmes.
