CEO salaries in South Africa’s state-owned enterprises (SOEs) have become a topic of growing concern, with some executives earning up to R15.5 million annually, despite the underperformance of the entities they lead.
These figures, which were revealed through several Parliamentary Q&A sessions, have raised serious questions about the fairness and sustainability of such lavish compensation, especially when many SOEs are grappling with financial challenges and failing to meet their mandates.
The public is increasingly alarmed at the lack of accountability, as these salaries are paid regardless of whether the organizations are turning a profit or providing essential services effectively.
The Eye-Watering Numbers Behind CEO Salaries
The CEO salaries at South Africa’s SOEs are higher than many would expect, especially when considering the lackluster performance of some of these entities.
The Democratic Alliance (DA) has been vocal about the issue, calling attention to the unsustainable system that allows high salaries for executives with little regard for the actual performance of the organizations they lead. According to the DA, over R400 million is spent annually on executive pay across just 13 departments that oversee 117 entities.
The true cost could be much higher, considering South Africa has close to 700 SOEs, many of which have not disclosed their executive compensation.
At the top of the list is the CEO of the Development Bank of South Africa (DBSA), who takes home a massive R15.5 million a year. This figure translates into a monthly salary of about R1.29 million and a daily wage of R42,465. Despite the high compensation, questions about the DBSA’s effectiveness and its ability to achieve its goals continue to persist.
Other notable SOE CEO salaries include:
- Transnet: R8.5 million annually (R708,333 per month, R23,287 per day). Despite receiving a R47 billion bailout in 2023 to address severe operational inefficiencies, Transnet’s CEO is still heavily compensated.
- Passenger Rail Agency of South Africa (PRASA): R7.8 million annually (R650,000 per month, R21,370 per day). Despite a long history of corruption, mismanagement, and failed infrastructure projects, PRASA’s CEO continues to earn a lucrative salary.
- Road Accident Fund (RAF): R7.1 million annually (R591,666 per month, R19,452 per day). The RAF is technically insolvent, burdened with billions in unpaid claims, yet its CEO is well-compensated.
- Council for Scientific and Industrial Research (CSIR): R6.92 million annually (R576,667 per month, R18,959 per day), including R2.3 million in bonuses over two years. Despite being a key research entity, the CSIR has failed to meet performance expectations while continuing to pay high salaries.
While these salaries may be justified in the private sector based on company performance, they seem out of place in the public sector, where service delivery and financial health are often in question.
The Disconnect Between Performance and Pay
Unlike the private sector, where CEO salaries are typically tied to financial performance, shareholder value, and the company’s overall success, most South African SOEs are not subject to these same standards.
Instead, CEO salaries in these public entities are often determined by frameworks set by the Department of Public Service and Administration (DPSA) and other regulatory bodies.
However, these frameworks are frequently bypassed, and executives are paid far beyond the prescribed limits, even when their entities are underperforming.
The DA has argued that this system allows for the creation of a culture of excess at the top level, with little to no accountability for the lackluster performance of the SOEs. If such financial excesses are taking place at the executive level, the DA argues, it is likely that similar inefficiencies and financial waste are happening throughout the rest of the organization.
Calls for Reform and Accountability
The DA has called for an urgent review of CEO salaries in South Africa’s state-owned enterprises. They are pushing for the Minister of Finance to include these salaries in the government’s spending reviews, urging reforms that would tie executive pay to performance and ensure better public oversight.
Furthermore, the DA has proposed that the Minister of Public Service and Administration introduce a standardized remuneration framework for SOEs. This would require mandatory disclosures of CEO salaries and justifications for any pay that deviates from the established norms.
The DA believes this is crucial for ensuring transparency, accountability, and responsible management of public funds.
In addition to financial reforms, the DA is advocating for broader governance changes to align the operations of South Africa’s SOEs with the core principles of public service. These principles—such as transparency, accountability, and service to the people—are vital for restoring trust between the government and the public.
“These excessive salaries are an affront to the millions of South Africans who rely on basic services that are consistently failing,” the DA concluded.
A Growing Crisis of Public Trust
The issue of CEO salaries in South Africa’s SOEs is part of a broader crisis of governance, public trust, and accountability. South Africans are increasingly frustrated by the failure of these public entities to deliver the services they need, especially when those tasked with managing them are paid millions, irrespective of performance.
For many, this situation represents a misallocation of public funds and a failure of the government to hold public sector executives accountable for their actions.
As the DA and other critics push for reform, it is becoming increasingly clear that the current system is no longer tenable. For South Africa to move forward, it will require a serious commitment to transparency, performance-based executive compensation, and a renewed focus on service delivery in its state-owned enterprises.
Related: South Africa’s National Minimum Wage Increases to R28.79 Per Hour
The CEO salaries within South Africa’s state-owned enterprises have become a contentious issue, as many of these entities continue to struggle with performance, financial challenges, and poor service delivery. While executives may command high salaries in the private sector, these large pay packages seem unjustifiable when SOEs fail to meet their mandates.
The growing public outcry highlights the need for urgent reforms to ensure greater transparency, accountability, and efficiency within the country’s public sector.
If South Africa is to restore public trust in its state-owned enterprises, it will need to reevaluate the way executive compensation is structured and ensure that public servants are held to the highest standards of accountability.
