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”.