ENTERPRISES NEED TO BE PURPOSE DRIVEN
IN THE recent 2020 State of the Nation Address, President
Cyril Ramaphosa re-affirmed the government’s commitment to fixing South Africa’s state-owned enterprises (SOES). The government plans to rationalise and consolidate SOES to ensure that they are able to fulfil their strategic economic and developmental mandate as well ensure that they are financially sustainable. This aligns well with the Durban Chamber’s belief that SOES are crucial to our country’s strategic socio-economic agenda and cannot be allowed to fail and that the government must continue to retain ownership of vital SOES to further crucial national programmes.
After all, SOES are prominent organisations that play a significant role in critical sectors such as utilities (electricity and water), transport
(air, rail, freight, and pipelines) and telecommunications. They are meant to be the economic infrastructure that drives the growth and development of South Africa’s economy and enables the government to enact policy for the benefit of all. However, most SOES are in a state of financial and operational collapse, and they represent the greatest risk to South Africa’s economy and society as a whole, exacerbating socio-economic challenges such as high unemployment.
Generally, South Africa’s SOES are displaying similar symptoms; namely, chronic mismanagement, ongoing corruption, an inflated payroll, consisting of overpaid and under qualified management and workers, and a disturbing lack of adherence to an effective governance and compliance framework.
These are often cited as the key issues but many now contend that an equally important challenge is that fact that South Africa’s SOES do not appear to have a clear mission that motivates and drives them to achieve their strategic purpose. This lack of clarity has significantly impacted the performance of SOES and has resulted in many of the issues mentioned above. We only have to look at the recent successes achieved by countries such as Indonesia, Singapore, China and the United Arab Emirates through state instruments to understand what having a clear mission with a strategic plan and a timetable for achieving those goals could do for local SOES. The South African government needs to show strong leadership and political will to actively reverse the alarming levels of incompetence, mismanagement and corruption apparent in most SOES.
Many solutions have been proposed in various quarters on how to rectify the situation that most SOES find themselves in, which will allow South Africa to “steady the ship” and “right our course” towards sustainable and inclusive economic growth and development.
However, if all SOES champion a strategic purpose that services the national socio-economic agenda, this will represent that most significant step in correcting the course of our country’s future. Additionally, role players and stakeholders need to be empowered. Focused SOES acting with strategic intent and purpose will help reduce the overall pressure and financial burden being placed on the fiscus and will empower SOES to create much needed added value to the nation. The private sector, of course, has an important role to play in the reformation of SOES in South Africa, and in my next column, I will expand on how the private sector can add value to the public sector in terms of operational efficiency, financial stability and profitability.