Public Sector Overview

The Largest Employer in the Country

By Raine St.Claire

According to the latest statistics released in 2023, the public service remains the largest employer in the country with 1 230 835 employees.

Budget For 2024

In his latest budget speech on 21 February 2024, Enoch Godongwana, Minister of Finance revealed that R2.8trillion, or 51.1% of total non-interest expenditures, has been allocated to provinces and municipalities over the next three years.

• R531.7-billion to local governments

• R2.3-trillion for provinces

For the 2024/2025 fiscal year, an additional R105.5-billion rand has been allocated to provinces over the next three years to cover the cost of implementing the 2023/2024 public service wage agreement, mainly in the education and health sectors.

Government Spending In 2023

Total government spending:

• R2.27-trillion 2023/2024 which is R26.3-billion higher than in 2022/2023

Estimated real GDP growth:

• 0.6% in 2023 (down from 0.8% in 2022)

Revision due to weaker-than expected outcomes in Q3 2023:

• Particularly in household consumption and fixed investment

Public-Sector Capital Expenditure Increase

• Capital expenditure increased from R209.1-billion in 2022 to R582.3-billion

• Distribution of Expenditure

• Public corporations were the largest spenders, followed by local government, provincial government, and extra-budgetary accounts and funds. National government and higher education institutions spent the least.

• Total municipal expenditure in 2023/24 is estimated to be R612 billion, increasing to R646.9-billion in 2024/25. Total expenditure for 2023/24 is 9.8% higher than the adopted budget for 2022/23 financial year.

• The main cost drivers are employee related costs and materials and bulk purchases representing 27.7% and 33% of the operating expenditure respectively.

Provincial Government

Provincial government departments spent R33.7-billion (16.1% of total expenditure), with projects like road upgrades and educational initiatives.

Extra-Budgetary Accounts and Funds (EBAS)

• EBAs contributed R20.6-billion (9.9%), with entities like the South African National Roads Agency and the Property Management Trading Entity leading in projects.

National Government

• National government departments spent R15.0-billion (7.2%), focusing on areas like police services, water and sanitation, and education.

Higher Education Institutions

• Higher education institutions spent R8.9-billion (4.3%), with Stellenbosch University, University of the Witwatersrand, and NorthWest University leading in expenditures for projects such as research institutes, buildings and infrastructure upgrades.

Breakdown By Sectors

Public Corporations

Eskom, Transnet Limited, Telkom, and PRASA (Passenger Rail Agency of South Africa) were major contributors.

Eskom

Government supported ESKOM to the tune of R31.7-billion (2021: R56-billion) during the year which could only be used to settle debt and interest payments.

• B-BBEE contribution level: 4 (100%), Score 84.10

• Skills Development 13.20

• Socio-Economic Development 5.00

• Headcount: 39 601 employees at year-end, 820 down from 2022

Employee diversity:

• 65% male and 35% female (2022: 66% and 34%)

• 3.43% of the Eskom workforce are women:

• 20% at the executive level

• 42.81% at senior management

• 39.59% in professional and middle management

Transnet limited

• B-BBEE contribution level: 2

• 22.11 B-BBEE skills development score

• Headcount (2023): Total Headcount - 55 827 including contract employees

• Transnet National Ports Authority 3 851 employees (9%) decline

Employee diversity:

• Black employees constituted 78.6% of the total workforce

• Women represented 44% in Exco and 47.4% in extended Exco

• People with disabilities accounted for 2.3% of employees

• Black women-owned enterprises R7.41-billion

• Black youth enterprises R1.83-billion

Transnet

• The government provided Transnet with a R47-billion guarantee facility to support its recovery plan and meet immediate debt obligations.

• Cabinet approved the Freight

• Logistics Roadmap in December 2023 to address South Africa’s unreliable logistics system

• The roadmap outlines immediate steps to enhance port equipment, locomotive availability, and network security

• It aims to improve efficiency, introduce competition, and leverage private sector support

• Third-party access to the freight rail network will be introduced by May 2024 to promote competition

• A private partner is secured to upgrade Pier 2 of the Durban Container Terminal, increasing private investment, enhancing technological capability, and improving operational efficiency

• The rail recovery programme of PRASA is continuing, with 27 corridors reopened by December 2023. This will increase the number of passengers on Metrorail from 15.6-million in 2022/23 to an estimated 48.6 million by 2026/27.

Telkom

• Total number of employees: 23 756 (2023)

• B-BBEE Contribution Level: 1 (135%)

• Score: 120

• Skills Development: 23.47

• Socio-Economic Development: 12.00

• Employee diversity: 16 847 male employees, 6 909 female employees

Telkom’s profits rose in the six months ending September 30, 2023. Group revenue increased by 2.5% to R21.78billion, driven by mobile traffic growth, fibre infrastructure monetisation, and IT business expansion. Despite economic challenges, Telkom maintains its FY2024 guidance, expecting low to mid-single digit growth in revenue and EBITDA. It plans to invest cautiously in infrastructure, targeting a capex-to-revenue ratio at the lower end of its guidance range.

Source: The World Bank| StatsSA | Telkom| Transnet| BusinessTech | SAGovernment| Vulekamali | TelkomSA