Gordhan’s summary explains SA’s new SOC

Public Enterprises Minister Pravin Gordhan has published an explanatory summary for the National State Enterprises Bill that will create a mega stateowned holding company that will own and manage about 13 of South Africa’s state-owned companies.

Gordhan will introduce the Bill in the National Assembly soon. The Bill will establish the State Asset Management SOC Ltd and provide for the phased transfer of state enterprises to the holding company.

According to the Bill, these entities under the public enterprises department will potentially be transferred to the new company:

Air Traffic and Navigation Services.

Airports Company. Broadband Infraco.

The Central Energy Fund. Denel.

Eskom.

Sentech.

South African Airways.

South African Forestry Company.

SA National Road Agency. South African Nuclear Energy Corporation.

South African Post Office. Transnet.

Most of these state-owned companies (SOCs) are more known for corruption and mismanagement than successful service delivery.

According to the explanatory summary, “it is accepted” that the performance of SOCs was “suboptimal” during the past decade, with key weaknesses in the form of excessive politicisation of boards and senior management appointments, weak coordination of national objectives and sectoral approaches and a deficit of the required professional skills and sound governance approaches.

Therefore, SOCs did not contribute to the aims of the developmental state and proved to be a massive drain on the fiscus.

After the Bill was published in September for public comment, about 3 500 comments were received.

The comments included three main themes – the need for a clear state ownership strategy; the need to harmonise the relevant legislative rules; and the need for transparent and appropriate governance and accountability mechanisms.

President Cyril Ramaphosa will have to develop a “national strategy” with the presidential advisory committee and in consultation with the new stateowned holding company, as well as the minister(s) in charge on performance, objectives, performance targets and developmental obligations.

While this sounds like a noble idea, the Organisation Undoing Tax Abuse (Outa) already said at the publication of the Bill that it was nothing to write home about.

“It envisions doing away with the department of public enterprises – a department at the centre of state capture – and replacing it with a holding company under which our state-owned entities will be controlled,” said Brendan Slade, the legal project manager at Outa.