Multi-billion rand bailouts for South Africa’s transport companies

Between 2008 and 2023, South Africa’s state-owned entities (SOEs), which include South African Airways (SAA) and Transnet, received more than R520 billion in government support.

This is according to a report by the Organisation Undoing Tax Abuse (Outa), which says there is little link between these entities’ performance and their remuneration practices.

Thus, the organisation is calling for urgent reform of how SOEs oversee board remuneration of non-executive board members.

Its report also calls for accountability by linking board members’ pay to measurable outcomes and imposing consequences.

The report, Enhancing Board Remuneration Governance in South African Public Institutions: A Comparative Analysis, examined the pay practices at Eskom, Transnet, and South African Airways.

Findings include weak links between remuneration for non-executive board members and their actual measured performance.

Outa also found that remuneration practices remain inconsistently transparent, which leaves them exposed to political influence.

Much of the R520 billion in government support received by South Africa’s SOEs was spent on what Outa calls ‘generous remuneration’.

Despite this, it found that there is little evidence that board and executive pay consistently align with operational turnaround, financial stability within the entities, or measurable service delivery improvements.

“South Africans have watched SOEs’ collapse while executives and board members continue to receive generous remuneration,” says Robyn Pasensie, OUTA Parliamentary Project Manager.

“That disconnect erodes trust and undermines accountability.”

“This is not about cutting pay for the sake of optics. It is about linking remuneration to clear, measurable outcomes. If performance declines, pay must reflect that reality.”

Outa’s findings

The organisation benchmarked South Africa’s governance practices at state-owned entities against those of New Zealand, Canada, and India.

It found that while formal regulations exist in South Africa, enforcement is weaker, and insulation from political influence remains significantly less robust.

In SAA’s case, the entity entered business rescue in December 2019 after it accrued nearly R50 billion in debt, demonstrating a pattern of governance collapse.

Outa found that board members continued to receive full retainers and performance bonuses despite operations grinding to a halt.

Independence in remuneration-setting was virtually absent, as was performance linkage, since board members received salary increases and travel allowances despite operational collapse.

Political interference was rife within SAA, with political actors influencing governance decisions, such as fleet procurement and route cancellations.

Outa notes in this case, remuneration practices not only failed to incentivise performance but also actively rewarded mismanagement, contributing to institutional collapse. 

Similarly, findings at Transnet revealed the dangers of remuneration practices disconnected from governance principles.

Under Brian Molefe’s leadership, the Transnet board was found to facilitate procurement corruption in the 1,064 locomotives deal, during which bonuses of R2.3 million were approved for implicated executives.

As with SAA, Transnet’s remuneration decisions were heavily influenced by executive interests and lacked independence, with bonuses paid to members despite internal audit warnings about irregular procurement.

Outa found that in Transnet’s case, remuneration governance failures directly facilitated corruption, mismanagement, and the erosion of public trust.

Pasensie notes that the goal of the study and its findings is to close governance loopholes, strengthen consequence management, and protect public funds.

“This is not about paying less. It is about paying properly,” she says.

“Board remuneration must be tied to measurable performance outcomes, clear governance standards, and transparent reporting. If an SOE collapses under a board’s watch, there must be accountability.”

Pasensie adds that remuneration reform is not a technical exercise, noting that it goes to the heart of fiscal stability and constitutional governance.

“If boards are rewarded despite institutional failure, we entrench decline. If we align pay with performance and accountability, we send a different message. Deliver, or step aside.”