Acsa’s R400m irregular expenditure headache

The Airports Company South Africa (Acsa) is a 74.6% government-owned entity managing nine major airports across South Africa, including major hubs such as OR Tambo International in Gauteng and Cape Town International in the Western Cape. Acsa has demonstrated profitability, with a R1.2 billion profit after tax in the year ending 31 March 2026, its third consecutive profitable year.

It is also self-funded and contributes to the government's revenues through dividends and taxes on profits. Despite operating in a sector affected by the Covid-19 pandemic, Acsa's airports have largely recovered. However, the company faces challenges due to bad governance tendencies, with the Auditor-General (AG) flagging an increase in irregular expenditure, particularly in procurement and supply chain functions.

The AG's findings show that Acsa's irregular expenditure rose to R400.3 million in the year ending 31 March 2026, up from R333.1 million in the same period last year, with R146.6 million being new expenditure. Despite receiving an unqualified audit opinion, the AG's findings mean Acsa did not achieve a clean audit. The CFO of Acsa, Luzuko Mbotya, acknowledged that irregular expenditure is not unique to Acsa and that other SOEs are also facing similar issues.

He explained that the complex and heavily regulated procurement processes in the SOE sector can lead to irregularities, especially during emergency procurement situations. The AG has specifically highlighted irregularities with Acsa's contract to procure explosive trace detectors, which was procured through emergency rather than normal procurement processes.

This R36 million contract was disputed in court, resulting in the detectors not being used. Mbotya emphasized that while irregular expenditure is not corruption or theft, it still falls short of governance and best practice standards. A new chief procurement officer has been appointed to address past and new irregular expenditures.

Acsa has announced a R15 billion capital expenditure plan for 2027 to 2029, potentially increasing to R37 billion by 2031, to modernize airport infrastructure and services. To fund this plan, Acsa will raise R10 billion through debt capital markets and utilize its immediate cash reserves worth more than R5 billion. Mbotya stressed the importance of strengthening procurement systems to avoid further irregular expenditure that could hinder their planned capital investment initiatives.