South Africa’s long‑running battle over the future of its state‑owned enterprises (SOEs) has resurfaced, this time shaped by growing political tensions and a rapidly evolving governing landscape.
The latest flashpoint is the reported friction between the president and the electricity minister over the restructuring of Eskom — a dispute that revives an old ANC divide over whether SOEs should be privatised.
At the centre of the debate is Eskom’s unbundling, a process strongly backed by influential players in the government of national unity (GNU). Insiders say anyone resisting this restructuring risks clashing with a powerful lobby determined to push the reforms through.
For now, alignment among the electricity minister, Eskom’s chair and its CEO appears to ease the impression of internal conflict, though deeper tensions linger beneath the surface.
Interior to further government reforms is the amendment of the Water Services Act of 1997. Among other things, the amendment seeks to provide for a licensing system for municipal mechanisms delivering water services and for a water services licensing authority.
The implications of this amendment for public power and public functions are not immediately visible, despite the main issue being government’s constitutional obligations regarding water service provision.
This policy tug-of-war comes as the ANC adjusts to a new political reality: it no longer governs alone. Its partnership with the DA in the GNU requires compromises, especially on economic policy. As the country edges toward the 2029 national elections analysts expect high-stakes bargaining over unresolved policy matters — including the future of SOEs — to intensify.
The broader political landscape is increasingly complex. With local elections less than a year away, South Africa may see new, and potentially unstable, coalitions emerge. Liberal‑leaning policy reforms, once slowly negotiated, have become urgent under the GNU’s confidence‑and‑supply arrangement. Among them is the contentious issue of privatisation — a debate that has long split policymakers into two camps.
One faction, including reformists within the ANC, argues that failing SOEs should be opened to private participation or fully privatised, free from the constraints of public sector regulations. The opposing view insists that SOEs remain central to a developmental state and must stay under state control. Over the years the debate has broadened beyond Eskom to include water, logistics and broadband infrastructure, all sectors strained by ageing infrastructure and governance failures.
Often overlooked in this debate is the constitutional reality that SOEs, as extensions of the state, wield public power that cannot simply be transferred away. Even when private companies take over public functions they in effect carry a public mandate and remain subject to constitutional obligations. This means privatisation does not reduce the need for regulation — it increases it.
In developing economies such as South Africa, SOEs anchor long‑term industrialisation goals. Their authority, rooted in legislation, binds them to public accountability frameworks. When private entities step into these roles they too operate within this public‑law space. Without clear rules governing this blurred boundary oversight gaps emerge leaving essential services exposed to arbitrary private-sector decision-making and potential rights violations.
Experts warn that without a formal framework defining the organ of stateness of private entities performing public functions, South Africa risks creating a governance vacuum. This is especially concerning in an era when privatisation is pursued as a shortcut to fix capacity failures in the government. Organ of stateness refers to the qualities, criteria and conditions under which an entity, whether a functionary or even a private actor, acquires the character of an organ of state because it exercises public power or performs a public function derived from the constitution or legislation.
As the GNU steers the country through a delicate political transition, analysts argue that a national conversation is needed — one that sets transparent rules for any privatisation or outsourcing deal, strengthens accountability for private operators of public functions and protects the state’s constitutional duties.
The stakes are high: the future of South Africa’s essential infrastructure and the rights tied to it may depend on the decisions made during this period of political flux.
• Mathebula is head of faculty people management at The DaVinci Institute and executive chair of the Thinc Foundation.
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