Minister Malatsi: DCDT Portfolio Challenges Governance, SOEs Face Instability

• Minister Solly Malatsi reports persistent governance issues and liquidity risks across 11 DCDT state-owned enterprises.
• Malatsi stated the government lacks the capacity to save unsustainable entities, urging SOEs to seek commercial sustainability.
• Progress has been made in stabilizing leadership, with full boards now in place for nearly all DCDT entities.
• SITA's business model is under review, while the SABC reported a R253 million net loss and finalized its new funding model.
• The DCDT aims for a pro-competition and stabler policy environment to attract investment in the ICT sector.

Malatsi has consistently articulated a firm stance that the state no longer possesses the financial capacity or the operational means to sustain entities that are inherently unviable.

Minister Solly Malatsi has highlighted persistent governance issues within several entities under the Department of Communications and Digital Technologies (DCDT) portfolio, describing them as a significant "pain point." The portfolio encompasses a diverse group of eleven state-owned enterprises (SOEs), including Broadband Infraco, the Film and Publications Board, the Independent Communications Authority of SA, NEMISA, Postbank, the South African Broadcasting Corporation (SABC), the SA Post Office, Sentech, the State IT Agency (SITA), the Universal Service and Access Agency of SA, and the .ZA Domain Name Authority. These entities, according to Malatsi, each face a unique array of difficulties.

The core challenges identified across these DCDT SOEs range from pervasive leadership instability and deep-seated governance problems to critical liquidity risks impacting many of them. Malatsi has consistently articulated a firm stance that the state no longer possesses the financial capacity or the operational means to sustain entities that are inherently unviable. He emphasized that for too long, the leadership within these organizations has failed to adequately invest in maximizing their commercial sustainability or exploring alternative revenue streams, leading to an over-reliance on continuous state funding, which the government is now unable to provide.

Despite these significant hurdles, the Minister did acknowledge some positive developments. He noted progress in stabilizing leadership at the board management level and in filling crucial executive roles. This effort has resulted in full boards being established across nearly all entities, a marked improvement from the previous situation where many lacked complete oversight. This stabilization is seen as a foundational step towards addressing the broader governance issues that continue to plague the DCDT portfolio.

Among the DCDT's SOEs, the State IT Agency (SITA), which serves as the government's primary IT procurement arm, continues to be a particular source of frustration, described by Minister Malatsi as a "bugbear." The agency's ongoing struggle to consistently meet the government's diverse ICT requirements remains a critical concern. However, Malatsi expressed optimism regarding recent leadership changes, noting the appointment of a capable managing director and a suitable board, signaling a renewed opportunity for the institution to improve its strategic direction and operational effectiveness. In a significant move, a comprehensive review of SITA's business model is currently underway, a process that predates Malatsi's tenure but is now advancing rapidly.

The South African Broadcasting Corporation (SABC) also presents a long-standing financial predicament, particularly concerning its ability to fund public broadcasting services. The public broadcaster recently indicated a need for additional funding to cover upcoming local government elections. Its financial health remains precarious, with the SABC reporting a net loss of R253 million in the 2024/25 financial year, representing a 28% increase compared to the previous 2023/24 reporting period. Adding to its woes, the SABC has been embroiled in disputes with state-owned signal distributor Sentech over unpaid services.

To address the SABC's chronic financial instability, the DCDT announced the appointment of BMIT Knowledge Group last September. This research and advisory firm was tasked with developing a sustainable funding model to secure the public broadcaster's long-term financial viability. According to Malatsi, the work on this crucial funding model was finalized a couple of months ago. While the funding model has been submitted to the National Treasury for review, the SABC Bill (B32-2023) was withdrawn from Parliament in November 2024.

Beyond the specific challenges faced by individual entities, Minister Malatsi articulated a broader vision for the DCDT portfolio, emphasizing the development of a clearer policy direction across several key areas. A central tenet of this vision is the promotion of a pro-competition environment within the sector, aiming to foster a more stable policy landscape. This stability is deemed crucial for attracting the necessary investments to stimulate growth and innovation within South Africa's digital and communications industries.

In terms of governance progress, Malatsi confirmed that, with one notable exception, all DCDT entities now operate with fully constituted boards. The previous Film and Publications Board council's term concluded in April 2026, and the process for appointing a new council was initiated with public nominations invited in August 2025. This ongoing effort to ensure complete and stable board structures underscores the DCDT's commitment to improving governance across its diverse portfolio.

Lawyers advising clients interacting with DCDT state-owned entities (SOEs) should anticipate continued operational and financial instability, potential shifts in procurement practices (SITA), and changes to regulatory frameworks (SABC Bill, F&PB council). The stated aim for a 'pro-competition' and 'stabler policy environment' also signals potential legislative or policy reforms impacting the broader ICT sector, requiring close monitoring for compliance and investment strategy.

Source: Original reporting via ITWeb.