SABC awaits Treasury response on government guarantee request
The SABC needs a government guarantee of about R1bn to stay afloat
The South African Broadcasting Corporation (SABC) is anxiously awaiting the outcome of its government guarantee request to the Treasury, amid concerns that SA’s credit ratings could worsen if contingent liabilities rise much further.
Ratings agencies have raised concerns about SA’s pace of economic growth, which poses risks to fiscal consolidation and rising contingent liabilities.
The SABC needs a government guarantee of about R1bn to stay afloat. At the weekend, South African Airways (SAA), the struggling national carrier, received a R2.3bn cash injection from the government to repay its Standard Chartered Bank loan, which lapsed at end-June.
Communications Minister Ayanda Dlodlo’s spokeswoman, Pheliswa Sebati, confirmed that the revised funding proposal for the SABC had been submitted to the Treasury.
Once a decision had been reached on the matter, the minister would make an announcement, Sebati said.
In May, the Treasury rejected the SABC’s initial request for a government guarantee amid concern that it lacked accountability and a sound financial plan. Speculation was that the presence of chief financial officer and acting CEO James Aguma and former chief operating officer Hlaudi Motsoeneng — both blamed for the SABC’s financial ruin — was a factor in the Treasury’s reluctance to accede to a guarantee request.
Aguma is now suspended, pending the outcome of an internal disciplinary hearing. Motsoeneng was shown the door after being found guilty in June on all charges brought by the SABC including bringing the broadcaster into disrepute.
The SABC is in deep financial trouble and fears are that it could collapse should it fail to get the government guarantee. It has been struggling to meet its obligations, including the payment of service providers. Its huge losses have been attributed partly to Motsoeneng’s controversial 90% local content policy, which the interim board has since jettisoned.
Parliament heard in June that the SABC was expecting to end the 2016-17 financial year with a net loss of R1.1bn. It recorded a loss of R411m in 2015-16, up from R395m the previous year.
SABC spokesman Kaizer Kganyago said the broadcaster had submitted the requested documentation and was awaiting a response. "We have to wait … we cannot put pressure [on the Treasury]."
Economist Dawie Roodt said while R1bn might not seem a lot in terms of a government guarantee, SA could not afford to increase its debt and contingent liabilities. "It all adds up. We cannot afford another rand … we should not be creating more expenses, but should be cutting back. It’s also unfair to expect taxpayers to constantly bail out underperforming state-owned enterprises," Roodt said.