Reform needed for SOEs, say experts

Hollowed out by state capture and robbed of the best brains during Jacob Zuma’s presidency, South Africa’s state-owned enterprises (SOEs) were further crippled by the previous government’s policy position to expand the developmental role of SOEs, say experts.

This, without providing adequate resources in appointing capable boards and CEOs. In line with the provisions of the National State Enterprises Bill, President Cyril Ramaphosa has phased out the department of public enterprises.

The draft law also provides for the establishment of a holding company to house SOEs to account to Ramaphosa.

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Billions lost

The appointment of the new holding company will be overseen by a panel chaired by a retired judge and representatives from business, labour and government. The panel will preside over interviews and make recommendations.

Nominations will be made public to the shareholder designated by Ramaphosa, who will make the appointments.

SOEs like Eskom, South African Airways, Transnet, Denel and Alexkor, have been forced to depend on state bailouts to survive.

Public policy expert Dr Sam Koma said the SOEs were “sitting on large debt running into billions of rands with some like Eskom not recoverable.

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“Too much political interference and political patronage further contributed to this situation,” he said.

“The president’s plan is informed by the question to reform and stabilise SOEs in the country, which have faced decades of dysfunctionality, ineptitude and unethical conduct.

“Evidence from the A-G [auditor-general], the public protector and the state capture commission reports attest to this point,” said Koma.

Independent political analyst Sandile Swana echoed the sentiments. He said the SOE issue was never about who constituted the board.

“The problem was caused when comrades took control of the boards and senior management for corrupt purposes.

“The SOE will only perform once independent and well-qualified board members and senior management are appointed,” said Swana.

‘Run them like businesses’

Reflecting on international case studies, Koma said Singapore and China had built SOEs based on market economy principles.

“Enabling SOEs to run on businesslike principles, becoming globally competitive, generating profits, reinvesting in the business and appointing talented senior executives, is what Singapore and China have done.

Swana said: “If we don’t have determination, courage and long-term strategic vision, we are unlikely to succeed.”

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