LETTER: SOEs have to change their models to survive
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The continued bailout of state-owned enterprises (SOEs) is unsustainable. There is a great need to develop comprehensive strategies that will enable their continued survival.
This is a changing world. We probably need to rationalise and decommission some of those entities that are no longer necessary to drive government strategy. It will also be essential that the government as a shareholder supports those that are deemed critical since they could help grow the economy.
The SABC recently announced that it would retrench some staff and terminate the contracts of freelance contractors to improve its financial position. It was reported that 45% of the SABC’s expenditure is salary related, making it difficult to continue some of its core activities, such as the creation of new content. But the government has intervened, citing insufficient consultation with unions.
All entities in a dire financial position have to reduce operational costs or grow their revenue to be sustainable. Failure to do so will force the government as shareholder to help cover the financial shortfall.
All such entities should modify their business models to cope with the changing environment, including critically analysing their relevance. The government will need to play an active role in some of the SOEs that are deemed critical to the economy. This will therefore require a revised funding model for SOEs to survive.
Nyaniso Qwesha,Via e-mail
JOIN THE DISCUSSION: Send us an e-mail with your comments. Letters of more than 300 words will be edited for length. Send your letter by e-mail to letters@businesslive.co.za (mailto://letters@businesslive.co.za). Anonymous correspondence will not be published. Writers should include a daytime telephone number.
This is a changing world. We probably need to rationalise and decommission some of those entities that are no longer necessary to drive government strategy. It will also be essential that the government as a shareholder supports those that are deemed critical since they could help grow the economy.
The SABC recently announced that it would retrench some staff and terminate the contracts of freelance contractors to improve its financial position. It was reported that 45% of the SABC’s expenditure is salary related, making it difficult to continue some of its core activities, such as the creation of new content. But the government has intervened, citing insufficient consultation with unions.
All entities in a dire financial position have to reduce operational costs or grow their revenue to be sustainable. Failure to do so will force the government as shareholder to help cover the financial shortfall.
All such entities should modify their business models to cope with the changing environment, including critically analysing their relevance. The government will need to play an active role in some of the SOEs that are deemed critical to the economy. This will therefore require a revised funding model for SOEs to survive.
Nyaniso Qwesha,Via e-mail
JOIN THE DISCUSSION: Send us an e-mail with your comments. Letters of more than 300 words will be edited for length. Send your letter by e-mail to letters@businesslive.co.za (mailto://letters@businesslive.co.za). Anonymous correspondence will not be published. Writers should include a daytime telephone number.