National State Enterprises Bill for SOEs slammed by opposition parties

Public Enterprises Minister Pravin Gordhan. File Picture: David Ritchie

Public Enterprises Minister Pravin Gordhan. File Picture: David Ritchie

Published Sep 18, 2023


Durban - Opposition parties have slammed the government’s plans to create a new state-owned entity to oversee struggling state-owned enterprises (SOEs), saying this is not the solution for accountability and governance.

The draft National State Enterprises Bill was recently published for public comment in the Government Gazette.

In terms of the bill there would be a new shareholder model with SOEs like Eskom and Transnet falling under the newly created State Asset Management Company.

Public Enterprises Minister Pravin Gordhan had said that the model would have the advantage of separating the state’s ownership functions from its policy and regulatory functions, minimising the scope for political interference, and introducing greater professionalism into the entities.

The new model would replace the Department of Public Enterprises, which would cease to exist, he said.

It is unlikely that the bill will be processed before next year’s election and Gordhan’s plan clashes with the ANC view on SOEs, with the party resolution preferring that all state-owned companies return to their line departments, especially Eskom, which they believe should fall under the Department of Energy.

DA MP Ghaleb Cachalia said while the bill seeks to enable private equity investment in strategic SOEs and they “welcome development that aligns with long-standing DA policy, the bill’s provision for a new shareholding company to oversee the dysfunctional SOEs is counterproductive and renders it undesirable”.

“Establishing a brand-new SOE – with its own bureaucracy and costly operating budget – as the panacea that struggling SOEs need to get back on track is merely proposing another vehicle to perpetuate corruption and maladministration by connected cadres.”

Cachalia said the bill would have been beneficial if its sole focus was to create pathways through which private investment could start flowing into the SOE sector, as originally intended.

“Our stance has always been that SOEs should either be privatised entirely or opened up to public/private partnerships to improve efficiencies and increase innovation.”

He said instead, the ANC government had opted for more state control and centralisation of the SOE sector.

“This will drive away the badly needed private equity investment, leaving these crisis-ridden companies exclusively dependent on taxpayer-funded bailouts.

“The challenge is, these bailouts will become increasingly difficult to come by as national Treasury has effectively told the country that the state coffers are empty and everyone needs to tighten their belts.”

Cachalia said estimates from the South African Reserve Bank project that load shedding may have knocked off 3.2% GDP growth from the country’s economy in 2022. This is likely to be higher in 2023, he said, as the rate of electricity blackouts has almost doubled. He said independent estimates had surmised that Transnet inefficiencies were likely to knock 5% off GDP in 2023.

“State-controlled central planning, corruption, state capture and maladministration have been responsible for the downward spiral in the SOE sector.

“Sadly, the proposed National State Enterprises Bill, in its current form, will only perpetuate the crises in the sector and shrink the South African economy even further,” Cachalia said.

Build One South Africa Movement leader Mmusi Maimane said this was typical of a government which cannot solve the problems with SOEs but is creating another entity.

“SOEs are not the problem, they need capable leadership and a governance framework, but here we see a plan that centralises power and entities are not capacitated. There needs to be a proper corporate governance framework and SOEs must be optimised for accountability and governance.”

The NFP’s Ahmed Munzoor Shaik Emam said this was not a solution and the only way to fix SOEs was to keep politicians out of the appointment, procurement and tender processes.

“All the boards of the state enterprises have failed and they were meant to be the oversight bodies. What makes us think that an independent body will solve the problem? Everywhere politicians are involved with the private sector and officials, there is looting, maladministration and corruption.”

Shaik Emam said the planned State Asset Management Company would only be viewed by politicians as providing access to resources and funds.