Auditor-General Kimi Makwetu has painted a worrying picture of the finances of the SABC and the South African Post Office (Sapo), saying both state-owned entities (SOEs) were at risk of collapse.
The Auditor-General said he was worried about the fate of many SOEs. "For just more than a quarter of them‚ there was significant doubt on whether they could continue their operations in future — these included the SABC‚ the Sapo group‚ and the Petroleum Oil and Gas Corporation of SA (PetroSA)‚" the latest report showed.
We are also concerned about the losses incurred and other concerning financial indicators at Armscor‚ the South African Nuclear Energy Corporation‚ and the Land and Agricultural Development Bank of SA group.
"We are also concerned about the losses incurred and other concerning financial indicators at the Armaments Corporation of SA (Armscor)‚ the South African Nuclear Energy Corporation (Necsa)‚ and the Land and Agricultural Development Bank of SA (Land Bank) group."
Out of this list‚ the SABC and the post office have probably grabbed the most headlines in recent months. The SABC came under intense scrutiny during the controversial tenure of former chief operating officer Hlaudi Motsoeneng. The post office has gained renewed attention as it bids to take over the distribution of social grants to millions of poor South Africans.
In its latest report on state finances‚ the Auditor-General reveals that Sapo spent R194m in fruitless and wasteful expenditure‚ making it the worst offender in that category in 2016-17. This compares to R7m in 2015-16. Sapo was also among the major transgressors when it came to irregular spending‚ alongside the SABC and the Airports Company SA (Acsa).
The total bill for irregular expenditure among SOEs came to R2.82bn. The main contributors to that tally were:
- Acsa — R1.169bn (2015-16: R134m); 60% as a result of non-compliance with legislation.
- Sapo — R719m (2015-16: R127m); 45% due to non-compliance with procurement process requirements and 37% not following competitive bidding or quotation processes.
- SABC — R687m (2015-16: R764m); 75% from not following competitive bidding or quotation processes.
"The number of SOEs with irregular expenditure decreased slightly but the value increased significantly to R2.884bn‚ of which Acsa‚ Sapo and the SABC were the main contributors‚" the Auditor-General said.
"The reason for this was the increased weakening of supply chain management at SOEs — although supply-chain management policies were in place‚ we found that officials were not familiar with the policies and the procurement processes they should follow‚ and, in some cases, circumvented the processes. Of most concern and impact are that the financial health of SOEs regressed."
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