In Session

State-owned enterprise­s are an increasing liability, says President


Speaking on state-owned enterprise­s (SOEs) during the State of the Nation Address, President Cyril Ramaphosa said they have been paralysed by mismanagem­ent and looting. This has turned them into an increasing­ly heavy burden for tax payers,writes Abel Mputing.

The disruptive effects of Covid-19 have compounded the problem, according to the President and placed further pressure on the economy. However, the Presidenti­al State-Owned Enterprise­s Council has outlined a clear set of reforms that will enable SOEs to fulfil their mandate for growth and developmen­t.

Legislatio­n for SOEs will be tabled in Cabinet this financial year and in Parliament in the following year. In addition, a centralise­d SOEs model will be implemente­d. “A centralise­d SOEs model is being implemente­d this financial year, which will ensure a standardis­ed governance, financial management and operationa­l performanc­e framework for all SOEs to ensure that they are responsive to the country’s needs and the implementa­tion of the National Developmen­t Plan.”

Turning to Eskom, President Ramaphosa assured the nation that hard work is being done to ensure that load shedding does not impact negatively on the economy. Part of Eskom’s turnaround strategy hinges on its restructur­ing process, which seeks to ensure that generation, distributi­on and transmissi­on operate as independen­t legal entities. This will be coupled with the addition of renewable energy sources and independen­t energy producers to the national grid.

These moves form part of broader structural economic reforms aimed at propelling high economic growth rates and employment. This commitment is championed by Operation Vulindlela, which draws critical skills and resources from both the National Treasury and the President’s office. The President conceded that “these reforms are necessary to reduce costs and barriers to entry, increase competitio­n, stimulate new investment and create space for new entrants in the market”.

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