SABC now allowed to borrow even more, as doubts remain about its going-concern status
The Treasury says permitting the SABC to lift its borrowing limits does not amount to a government guarantee
The loss-making SABC is breathing a sigh of relief after the Treasury acceded to its request to increase its borrowing limits from capital markets.
Communications minister Nomvula Mokonyane disclosed this week that the public broadcaster, which recorded yet another staggering loss of R622m in the financial year ended March, has been granted borrowing powers and a borrowing limit of up to R1.2bn by the Treasury, in line with the Public Finance Management Act (PFMA).
The auditor-general has raised doubt about the broadcaster’s ability to continue as a going concern, as it continues to struggle to meet most of its financial obligations.
In the 2016-2017 financial year, the SABC recorded a loss of R977m. In 2017, the SABC approached the Treasury in a bid to secure a R3bn government guarantee.
To date, the financially hamstrung public broadcaster has failed to raise funding from financing institutions while it awaits the outcome of its appeal to the Treasury. It has sunk deeper into financial crisis and is unable to pay some of its service providers and producers.
According to the department of communications and the Treasury, permitting the SABC to increase its borrowing limits does not amount to a government guarantee.
"The R1.2bn referred to in the statement is the borrowing powers that the board, as the accounting authority, has consistent with section 23 of the Broadcasting Act of 1999, read with the PFMA. It is not, therefore, a government guarantee. Neither does it mean that the SABC has the amount in its bank currently," the communications department said in Wednesday’s statement.
"Instead, the board still has to engage the lenders. Upon being successful in its engagement with the lenders, the SABC board will, as per the minister’s statement, prioritise the creditors listed therein including independent producers, the South African Football Association, [and] Sentech … [enabling] it to acquire new content," the department said.
The Treasury concurred, saying that the "SABC would borrow based on the authority of the board".
"The only time the minister would consider granting permission or not for the SABC is when the SABC wants to borrow in a foreign currency, and that would be in terms of section 66(7) of the PFMA, of which the SABC or the department of communications has not made such a request to the minister as at September 4 2018," the Treasury said.
This week, Mokonyane said money raised from capital markets would be used to pay creditors. She added that the broadcaster would be able to continue paying employees' salaries.
"These funds will [also] be utilised to acquire new content to replenish the current content offering so as to attract new audiences, thus generating commercial revenues. As a responsible government, we will not allow the SABC to collapse, and are committed to providing the board and management with our continued support to ensure that this national asset continues to serve millions of South Africans with information, knowledge and entertainment."