The plan to fix state-owned enterprises — start another state company

The South African government wants to house its major state-owned enterprises (SOEs) under a single holding company, reports the Sunday Times.

Public enterprises minister Pravin Gordhan told parliament more about the plan on Friday.

“As President Ramaphosa said, SOEs play a vital role in our economy, and he indicated in the 2022 [State of the Nation] that the presidential SOE council, which he appointed in 2020, has recommended that the government adopt a centralised shareholder model for its commercial state-owned companies,” said Gordhan.

“This would separate the state’s ownership functions from its policy-making and regulatory functions, minimise the scope for political interference, introduce greater professionalism, and manage the state’s assets in a way that protects shareholder value.”

According to the report, the plan would include major SOEs like Eskom, Transnet, Denel, and Prasa — all of which would be overseen by a single state holding company.

This would happen before Ramaphosa’s presidential term ends, and it would be up to the next president whether the Department of Public Enterprises would be retained.

The plan follows the state capture commission highlighting how SOEs were severely damaged and compromised in recent years and public outcry about these SOEs repeatedly receiving bailouts.

Several SOEs — including SAA — have already progressed toward public-private partnerships in an attempt to rebuild themselves.

 

However, for the rest of the country’s major SOEs, the Department of Public Enterprises embarked on a tour to find models that could be used to turn these entities around.

It visited China, Singapore, Malaysia, and France to learn more about how they run their SOEs, and reportedly determined that Singapore’s model is the most viable option for South Africa.

In Singapore, Temasek Holdings is a holding company that “serves as a central ownership model and a monitoring agency for SOEs.”

Before making a final decision, the department is waiting for recommendations from the state capture commission, and the passing of the SOE bill in the next few months.

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