JOHANNESBURG – The recent announcement of President Ramaphosa’s new cabinet provides a good opportunity to reflect on the critical role of ministers in the governance of the public sector. Parmi Natesan, chief executive of the Institute of Directors in Southern Africa (IoDSA), says that the work the IoDSA has done in the public sector over the years reveals some common governance challenges.
“We have conducted training and board evaluations, and performed governance advisory functions for public sector entities over many years, and there are common governance challenges that crop up,” she says. “Based on this, we have some constructive advice to the new cabinet, that will hopefully help them avoid these common pitfalls.”
The first point to make, Ms Natesan believes, is that ministers should realise the extent of the power they have as representatives of the sole shareholder, enabling them to play a much more active role than shareholders in the private sector. It is thus very important that they understand their role fully, and beware of allowing only political or other considerations to guide their actions.
“Boards are only as good as the people who serve on them—therefore one of a minister’s key responsibilities is to appoint effective and ethical individuals to the boards they oversee. This is absolutely critical for the success of these entities,” she explains.
Because of their overwhelming power, ministers should be careful not to undercut the boards they appoint and thus rendering them ineffective. A board that cannot set its own course cannot, in the end, be held truly accountable, she argues. She cites a recent editorial in the Financial Mail saying that the current CEO of Eskom is leaving the job “not because he has failed in his duties, but because the shareholder would not let him and his team do the job for which they were hired.” Governance best practice, as enshrined in the King Codes, is that boards, including those in the public sector, should be in a position to exercise their judgement independently without undue influence, in the best interests of the organisation, and to the benefit of all stakeholders—not just the shareholder.