State-owned enterprises get financial support from Godongwana despite ‘tough love’ approach 

Finance Minister Enoch Godongwana has offered financial support to basket-case state-owned enterprises (SoEs) despite his commitment two years ago to be discerning about taxpayer-funded bailouts to such entities. 

Struggling SOEs including Denel, the SA Post Office, Land Bank, Eskom, and South African Airways stand to receive financial support from Godongwana during the government’s 2023/24 fiscal year. 

Two years ago, Godongwana pledged to show SOEs “tough love” in reference to no longer offering a blank cheque to such entities, some of which have habitually relied on taxpayer-funded bailouts for survival. Godongwana later clarified his stance, saying that bailouts would be considered on a case-by-case basis.

Some of the allocations to SOEs are new and others have been provisioned for and pencilled in the government’s previous budget. 

A new bailout includes one that will be offered to the Post Office, which stands to receive R2.4-billion. The Post Office is broken — operationally and financially. It has been recording financial losses for 16 consecutive years and owes the SA Revenue Services income and corporate tax payments. The Post Office also owes money to landlords at buildings that house its branches and has not made medical aid and pension fund contributions on behalf of its workers for several years.

The Post Office has, in previous budgets, asked Godongwana for financial assistance. But Godongwana has not entertained such requests. The National Treasury’s 2023 Budget review states that the bailout of the Post Office will help fund the SOE’s turnaround plan, which includes paying down debt and cutting as many as 6,000 jobs to save company costs. It is expected that the R2.4-billion to the Post Office will help fund its operations, including retrenchment packages for soon-to-be laid-off workers.