Imagine a medieval mayor collecting gold from citizens of his town to buy the things it needs. However, instead of actually buying anything he simply dumps all the gold into the local wishing fountain, firmly convinced that this will solve all of their problems.
What an absurd image, right? And yet this seems to be the exact strategy of the SA administration, which has been steadily pumping billions into struggling state-owned enterprises (SOEs), only to find that nothing has changed. Nothing, that is, except for the notable decrease in wealth among the lower and middle classes. Despite clear and indisputable numbers and even clearer need elsewhere, the unbreakable addiction to SOE bailouts keeps disturbing our peace.
In just the past 10 years SA has spent R520.6bn keeping failing SOEs afloat. Each and every South African has in effect contributed more than R8,600 to a system that gives precious little — if anything — back. So let’s have a look at where our money went:
- Eskom leads the list, having received R241.6bn. Once a symbol of development, it now brings more blackouts than light.
- SA Airways, once a proud national carrier, has taken R48.2bn, despite barely taking off.
- The SA National Roads Agency and Transnet follow, with R47bn and a requested R61bn, respectively.
- The Post Office and Denel — both shadows of what they once were — have also received billions. Together with hundreds of smaller SOEs, they account for R111.5bn more.
This isn’t just about waste. It’s about what we could have achieved in its stead. Assuming a budget of R40m and maximum attendance of 500 children, we could have built more than 13,000 schools. With money that we actually had, SA could have built enough schools to accommodate more than 6.5-million children in brand-new schools.
But it did not have to be schools; we could have built 2.6-million homes, or tripled the police force — a force that seems to be losing the battle against crime on many fronts. But instead, we kept pouring money into old, broken institutions, hoping against hope that they would recover.
They haven’t recovered. To understand why this cycle continues, we need to look beyond budgets and balance sheets. This is about more than economics — at its heart, bailouts are about ideology and politics. For the ANC-led government, SOEs are more than just state-run companies — they are opportunities to reward allies for political loyalty, often under the banner of “cadre deployment”.
The Lenin-inspired idea is that if the state controls key parts of the economy — such as electricity, transport and communication — it can shape a fairer society. In theory, it’s a powerful idea. In countries such as South Korea and Singapore, state-run entities seem to have played a real role in national growth. But those countries had strict discipline and extremely heavy punishments for corruption. In SA SOEs play the role of communist-era state enterprises — the effect of your work reward is not as important as knowing why and from whom you got it.
What makes these bailouts even more troubling is that they come with no real conditions. Year after year billions are handed over without serious reform, without meaningful restructuring, and without any sign of lasting change.
Even when reform is attempted, it almost always lacks urgency or follow-through. The promise to “unbundle” Eskom has been around for years, but progress has been painfully slow. Leaders come and go, but the problems stay the same. Strategic plans are announced with great excitement, only to fade away once the hard work begins.
And who pays the price? It’s always ordinary South Africans. A mother in Khayelitsha pays through her child’s underfunded school. A farmer in the Eastern Cape pays through broken roads. A nurse in Soweto pays when power cuts disrupt her clinic. By draining money away from schools, clinics and infrastructure, they make it harder for the state to serve its people. In trying to save a broken system, we are hollowing it out from within.
The real scandal — what could have been
The R520.6bn spent on bailing out failing SOEs is not just a line item in the national budget. It’s a decade’s worth of missed opportunities — real, measurable, and life-changing. We could have upgraded our electricity system, investing in modern, decentralised solutions that include independent power producers and renewable energy.
That same money could have created more than a million jobs — not theoretical jobs, but real ones through public works programmes: fixing roads, building and maintaining schools, and revitalising rural towns through infrastructure and enterprise zones. With youth unemployment at more than 50%, this should have been a national priority. Instead, we looked the other way.
In a country where every rand needs to do the work of three, spending half-a-trillion rand on broken state companies isn’t just bad policy — it’s an act of economic self-sabotage.
SA doesn’t need to destroy its SOEs — it needs to break free from their leeching hold. We have to come to terms that the state is not suited to running businesses. A bold government — SA urgently needs one — would start selling off nonstrategic SOEs, breaking up monopolies and opening space for private sector innovation and competition. It would treat SOEs like the service providers they are, not as symbols of loyalty or ideology.
There’s also a moral argument. Every bailout is a statement about what matters, and when the state chooses to fund failing SOEs over functioning schools or dysfunctional hospitals, it sends a message: political projects matter more than public service. That’s not just bad policy — it’s a betrayal of the people. At its heart it is a choice of party over people — a choice that will tarnish the legacy of the ANC for many years to come.
SA stands at a familiar crossroads, one faced by many countries in decline. To choose honesty over comfort, to face hard truths or to keep drifting slowly into financial collapse. Bailouts aren’t just economic decisions. They’re a reflection of who we are as a nation and who we are choosing to become.
The only way to get the economy going is to give it to people who run companies for the sake of growth, not because they feel they earned it one December at a conference somewhere.
• Maritz is campaigns director at Free SA.
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