A few short years ago, in a time defined by the ANC’s stranglehold on state power and all its associated trappings, the fate of state-owned enterprises (SOEs) provided the most glaring reference point of the party’s struggles to govern.
The state enterprises portfolio, made up of hundreds of entities of varying strategic importance to the country, became the canvas from which so many of the national governance and management issues could be studied.
Big entities with large-scale mandates and equally large balance sheets became the focus area for those wishing to transact with the state — and not always with good intentions.
The upside of the procurement slate at entities with ambitious capital and investment projects is that when one executes properly, they are in a position not just to profit as a business but also to contribute to ensuring state assets function properly and service the citizens of the country.
Alternatively, when those with dubious intentions make their way onto the procurement slate, the practice of failing to deliver while scraping off fees is not just a catastrophe for the balance sheet, which gets depleted, but has a dire impact on citizens who are dependent on that service.
Some of the most strategically important state entities — Eskom, Transnet and the Passenger Rail Agency SA (Prasa) — form the nucleus of ongoing economic activity as enablers of mobility and providers of critical energy. When they are unable to fulfil their allocated mandates, the costs to society transcend the mathematics of balance sheet losses and cause an unquantifiable escalation in many citizens’ cost of living.
Prasa is one institution whose primary mandate — getting working-class commuters to access economic opportunities daily — was derailed over an extended period, with dire consequences for commuters.
Ten years ago Prasa recorded 516-million passenger trips across its fleet. By 2024 this had collapsed to just 39-million trips. In between, a series of management, governance and procurement flaws conspired to cripple the once-thriving institution.
Between the cracks of underserviced trains, inappropriate signalling infrastructure and the odd loss of assets across the network, commuters had been left stranded and forced to migrate to alternative forms of transport that cost far more.
The question of whether Prasa could ever be revived, and whether it would ever be sustainable, is one most people believed had only one answer: no!
Core to the problem is that the old habits of external interference, policy drift and a wide-ranging culture of criminality across society inevitably and disproportionately affect entities such as Prasa.
The good thing about being subject to such deep levels of scepticism is that the glare of detractors diminishes due to low expectations and provides a window for reform that Prasa has actually managed to capitalise on. It recently received an unqualified audit opinion for the first time in nine years.
While some politicians may underplay the importance of audit outcomes, for entities such as Eskom and Transnet that have a presence in the capital and bond markets, audit outcomes are a critical enabler of access to capital.
Prasa managed to increase its passenger trips to 77-million on the back of infrastructure fixes. The increase reiterates the ongoing dependency of commuters on affordable transport options. The question of whether this can be sustained and even escalated is the primary challenge for Prasa’s current management.
It should be noted that in recent years the political noise and chaos around Prasa has diminished. Perhaps it is in that sweet spot where boards are allowed to govern and managers to manage where the universal turnaround of SOEs may be found.
• Sithole (@coruscakhaya) is an accountant, academic and activist.
