File image: Advocate Paul Hoffman. IOL.

CAPE TOWN -  On Monday,  Advocate Paul Hoffman SC, director of Accountability Now, said that the South African Broadcasting Corporation (SABC) is reportedly in such a dire state, it is unable to meet its financial obligations. 

What does this mean for ordinary South Africans? 

According to Hoffman, this will affect those who have paid their television license fees in advance, as reported on Fin24. 

This comes after the SABC’s earlier financial loss of R977 million, after tax for the 2016/2017 financial year. This is a hard knock in comparison to its net loss for the year ending March 2017 which more than doubled from R412 million in 2016. 

In an open letter to SABC chair Bongumusa Makhathini, Hoffman refers to a report on the SABC the auditor general delivered to Parliament last year. 

According to the report, the SABC’s audited financial statements for the financial year ended March 31 2017 records R40.854 million “deferred income” which is the money received for either goods or services that have not been delivered. 

READ ALSO: SABC confirms that they lost R977 million

Hoffman contends that because of the SABC’s battered financial state, people’s paid TV licences are at risk of being “negatively impacted”. 

Accountability Now therefore says that people are entitled to take action to protect their "investment in the services of the SABC".

In the open letter, Hoffman informs Makhathini that the organisation is “contemplating” a possible class action case against the SABC. 

"The SABC will continue to be reliant on government guarantees for it to continue as a going concern. That is, the SABC is unable to sustain its operations from its own resources and is entirely reliant on state guaranteed funding," Hoffman said in the open letter.

"It seems the SABC, already illiquid as its board concedes, is additionally likely to become insolvent in the short term. Yet it continues to collect licence fees, annually in advance, thus increasing concurrent liabilities."

Meanwhile, newly appointed board chairman, Makhathini revealed to Parliament last year that he and other board members had "hit the ground running" since assuming their positions three weeks ago.

Makhathini said that they were working on an application to National Treasury for a government guarantee so it could loan from banks to alleviate its financial woes.

Notably, the SABC receives revenue from primary revenue stream of advertising. 

However, this declined by 5% to R5.6 billion in the 2016/2017 financial year. 

The corporation also received an unfavourable audit, relating to irregular expenditure and deferred government grants. 

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- BUSINESS REPORT ONLINE