SOEs are crucial for South Africa’s economic security

The Economic Freedom Fighters (EFF) has consistently advocated against the privatisation of key state-owned enterprises (SOEs) in the firm belief these entities can become the very bedrock of our national economic security if managed effectively and efficiently.

Finance Minister Enoch Godongwana recently hinted that South Africa has an excessive number of SOEs, given the current fiscal circumstances. We strongly challenge this claim.

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Our stance is that SOEs can and should play a critical role in shaping South Africa’s economic trajectory, despite the financial challenges posed by looming austerity measures. Such measures have historically proven ineffectual in achieving sustainable economic outcomes, both domestically and internationally.

The EFF maintains that South Africa’s continual surrender of undue influence to the National Treasury could be detrimental to the nation’s future.

The suggestion that South Africa may have too many SOEs comes from a belief that the state should not actively participate in the market. Rather, it should merely regulate and allow the private sector to play a more significant role in providing social services and contribute to national economic security.

However, this ideology turns a blind eye to the reality that private capital in post-apartheid South Africa has consistently overlooked issues of inequality, poverty and unemployment, provided a select few continue to reap substantial benefits.

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Moreover, the ANC has proven its incapacity to steer the economy towards the nation’s interest.

South Africa has more than 300 SOEs. Regrettably, these entities suffer from rampant corruption, inefficiencies and an alarming lack of coordination and supervision.

These issues have reduced our SOEs to mere procurement sites, plagued by corruption, operating in an ad hoc manner with no significant sector role, and sometimes acting as regulatory stumbling blocks.

In stark contrast, China, our Brics partner, shows SOEs can be positive and transformative, central pillars of a country’s domestic and international economic landscape.

A superficial analysis might suggest China’s recent reforms aim to downsize or eliminate SOEs. However, a more nuanced understanding reveals these reforms as part of a larger political strategy – socialism with Chinese characteristics.

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Far from trying to diminish SOEs, China is seeking to improve their efficiency, performance and coordination. China’s SOEs also play an important role in sectors crucial to the lives of ordinary citizens. They are largely responsible for delivering water, electricity and telecommunications services, with reduced utility bills to benefit the Chinese population.

Through such efforts, China has been able to lift more than 50 million people out of poverty in just five years.

While we must consider South Africa’s unique features and characteristics, there’s no denying SOEs are crucial for national economic security.

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Certain sectors, such as energy, transport and manufacturing should be designated specific industries for SOE involvement. This isn’t to exclude private capital participation, but to ensure it doesn’t threaten national stability or impede development.

For instance, the development of new cities to relieve overcrowding in areas like Johannesburg and eThekwini would benefit from the coordination and leadership that SOEs can provide. These entities can oversee the creation of new industrial areas and manage high-risk, social-related technology initiatives. The onus of leading such massive projects falls on SOEs.

Furthermore, primary healthcare, sanitation and food security are vital areas where SOEs can create an environment in which private sector investments can later thrive.

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The long-term benefits of such SOE investments cannot be understated.

-Maotwe is EFF treasurer-general and an MP serving on the portfolio committee of public enterprises.