SOE's Nothing More Than Legalized Theft

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I was reading a report last night that the State Owned Enterprises in South Africa have received more than R520 Billion in bail outs over the last 10 years. When you consider these are businesses that have no competition and are what we would consider prime businesses yet they are failing. Ramaphosa mentioned in 2019 that they would not let these SOE's fail and this is exactly what has happened. I have no clue how SOE's are run in other countries and seeing stats like this you wonder how long before privatization takes place.

What is interesting to note and also very worrying that over the last 10 years that is an average of R52 billion per year in hand outs. When Zuma was in office the SOE's were only losing or costing the country R2.4 billion per year in total and that was 9 years ago. This highlights that these companies run by the state have deteriorated by a combined 2500%.

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Transnet which is the ports in SA has received R61 billion just last year and you have to seriously scratch your head to see where this money is being lost. The ports are on their last legs due to lack of investment, but the berthing fees they earn still guarantee revenue. This business run properly is a gold mine and instead we see ships avoiding SA ports on their route to Europe. There should be no bailout and instead seeing R100"s of billions in profit.

Eskom the power utility is so badly run they have gone backwards and average around R30 billon losses each year over the past 15 years. This is alarming considering their costs are rising at around 20% per annum. In 2016 they were in profit.

South African Airways received roughly R8 billon per year in hand outs and they hardly have any planes and only recently creased heir fleet to 20. An expanding fleet is worrying as this means higher operational costs with more losses expected. Another gold mine if run correctly.

The Post Office which has not evolved like other businesses have had to and only today Ramaphosa stated they need to change their business model. The reality is they are only still functioning because of the bail outs and this is no longer a viable business. The government uses the PO and a few banks, but otherwise you wonder why they have postmen. I could not even tell you where there is a post office in my area as they have all been shut down and courier companies have filled the void.

The common denominator from all of these examples is they all need heavy investment for these companies to be turned around. Transnet controlling the ports needs $ billions spent to upgrade the facilities in order to increase it's revenue and to turn a profit. Management needs to be replaced with people who know what they are doing which will result in automated jobs replacing the current staff.

Every year we see the same state owned companies going on strike for more money and in most cases get an above inflation increase which results in bigger losses due to increased expenses. These are not businesses one can take seriously and have to be seen as charitable companies expecting hand outs each year. Every business on this list if privatized would make profit each year which would be a $52 billion reversal on the budget and would add to the economy instead of being a drain.

Posted Using INLEO