SOEs to be overhauled in South Africa
JOHANNESBURG – South Africa’s (SA) State-owned enterprises (SOEs) are gearing up to undergo major structural changes as the government seeks to consolidate the National State Enterprises Bill, promising to change how SOEs operate in the country.
At the 2023 State of the Nation Address, President Cyril Ramaphosa said that ‘our greatest weaknesses are in State-owned enterprises. Many of our SOEs are struggling with significant debt, under-investment in infrastructure, the effects of State capture and a shortage of skills,’ – promising legislative and structural reforms to turn around its fate.
Consequently, the Minister of Public Enterprises, Pravin Gordhan, introduced the National State Enterprises
Bill, which currently sits in the National Assembly.
Broadly, the Bill provides for:
“The development of a strategy for national State enterprises”;
Establishment of the State Asset Management SOC Ltd with the State as the sole shareholder;
Provides for various mechanisms to operationalise a State-owned holding company for national commercial State-owned enterprises.
“While some view the introduction of the SOE Bill as a positive step towards the achievement of improved co-ordination and an important milestone towards streamlining oversight and enhancing governance of SOEs, critics, some question whether it resolves the issues currently faced by SOEs, including political interference, corruption and mismanagement,” said ENS Africa’s Pippa Reyburn, Yana van Leeve and Alexandra Maree.
The State Asset Management SOC Limited will hold ownership interests in thirteen key national government commercial enterprises capable of being subsidiaries. According to Ramaphosa, this centralised shareholder model will ‘ensure effective oversight of SOEs’. The asset management company and its subsidiaries are outlined to be guided by a national strategy developed by the President.
Advised
The strategy will be subject to public consultation and advised by a Presidential Advisory Committee, while the first Board of directors will be appointed through an independent panel chaired by a retired judge.
Additionally, it is said that future regulations will guide future appointments – underpinned by public participation and limited Presidential involvement. Limiting the influence of the president while amplifying public participation ‘is an opportunity to create legitimacy through an independent, transparent and participatory process,’ said the legal experts.