By Thebe Mabanga
The Road Accident Fund (RAF), currently the subject of a parliamentary inquiry over governance lapses, stood out sharply among state-owned entities (SOEs) that either showed improved performance or operated without requiring direct state bailouts, even when loss-making.
Even the struggling Denel, which received a R3.4 billion cash injection four years ago, is showing signs of stabilisation following the appointment of a new executive team.
The review of state-owned entities is contained in the Budget Review tabled by Finance Minister Enoch Godongwana on Wednesday in Cape Town.
The improvement of SOEs is a key pillar of government’s economic recovery strategy.
Collectively, they are responsible for electricity supply through Eskom, rail, ports and pipelines through Transnet, air travel infrastructure via Airports Company of South Africa, as well as development finance through institutions such as the Industrial Development Corporation.
“In the most recent financial year, the finances of major state-owned companies improved, with return on equity shifting from -15.6% in 2023/24 to 3.7% in 2024/25,” National Treasury said in the Budget Review.
Profitability was supported by improved operational efficiencies, stronger revenue collection and balance sheet optimisation. However, this improvement relied heavily on government support, particularly for Eskom and Transnet, largely in the form of credit guarantees rather than direct bailouts.
Total assets of SOEs (excluding development finance institutions) grew from R1.3 trillion in 2019/20 to R1.45 trillion in 2024/25.
Total liabilities rose from R960 billion in 2019/20 to R924 billion in 2024/25, after peaking at R871 billion the following year.
Net asset value increased significantly over the six-year period, rising from R325.7 billion in 2019/20 to R533.4 billion in 2024/25.
The review notes that Denel continues to face stagnant revenues, a cost base requiring further restructuring, and constrained funding.
“The Auditor-General did not express an opinion on its financials due to insufficient audit evidence,” the review states.
Efforts to stabilise Denel include appointing a permanent executive team, ramping up production and reserving R156 million of its bailout allocation for strategic repairs.
The improvement at Eskom and Transnet has been among the most significant developments over the past year.
“Eskom returned to profitability in 2024/25 after nearly a decade of sustained losses,” the review states.
The utility improved generation performance in line with its recovery plan, with load-shedding days declining dramatically from 325 days in the previous year to 32 days — reflecting improved system reliability and operational performance.
However, municipal debt remains a critical risk to Eskom’s long-term sustainability.
Transnet’s financial position remains fragile, characterised by rising debt and insufficient cash flow.
The company remains unprofitable but narrowed its net loss from R7.3 billion in 2023/24 to R1.9 billion in 2024/25 after implementing an 18-month recovery plan. It continues to recover freight volumes while now facing competition for the first time through third-party rail access.
Among development finance institutions, the Development Bank of Southern Africa and the Industrial Development Corporation remain in good health, while the Land Bank continues to struggle.
The IDC grew its assets from R109.7 billion in 2019/20 to R134.5 billion in 2024/25, with net asset value rising from R60 billion to R95 billion.
Over the same period, the DBSA expanded assets from R100 billion to R121 billion, while net asset value increased from R37.6 billion to R58 billion.
By contrast, the Land Bank’s assets shrank from R44 billion to R24 billion. However, it increased lending to black farmers from 7% in 2016 to 49% in 2025.
The Road Accident Fund, together with the Unemployment Insurance Fund and the Compensation Fund, forms part of the country’s social security funds.
The UIF remains the most robust of the funds, with net asset value projected to increase from R138.9 billion in 2025/26 to R152 billion in 2028/29, driven by accumulated surpluses.
However, the UIF expects revenue of R292.8 billion and expenditure of R312.3 billion over the medium term — largely for benefit payments — which will result in a deficit.
“Apart from the Road Accident Fund, which continues to be deep in deficit, social security funds and the Government Employees Pension Fund remain sustainable over the medium term,” the review notes.
The Government Employees Pension Fund (GEPF), whose assets are managed by the Public Investment Corporation, has remained stable over the past five years.
Benefit payments increased from R142.4 billion to R162.7 billion over the period.
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