President Cyril Ramaphosa says work has begun to establish a state-owned holding company to house all strategic parastatals, as the government accelerates efforts to streamline and improve the functioning of state-owned enterprises (SOEs).
“The Presidential SOE Council, which I appointed in 2020, has recommended that the government adopt a centralised shareholder model for its key commercial state-owned companies,” Ramaphosa said during his state of the nation (Sona) address on Thursday evening.
That 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 state assets in a way that protected shareholder value, he said.
He said the Presidential SOE Council was preparing recommendations on which SOEs should be retained, consolidated or disposed of. Many of SA’s SOEs remain in a dire state and are a drain on the country’s finances, which has prompted calls for them to either be privatised or closed down.
Ramaphosa said any recommendations would be subject to extensive consultation with all stakeholders. He emphasised the need to restore those companies to health, saying that the government was “[undertaking] far-reaching reforms that will make our SOEs more efficient, competitive, accountable and sustainable”.
The Treasury also regarded state-owned companies as a major risk to the fiscal framework, and Ramaphosa said it saw a greater role for the private sector in stabilising them, as the state battled to avoid a fiscal crisis.
Finance minister Enoch Godongwana introduced the “tough love” policy regarding SOEs — including no further bailouts — at a media briefing ahead of the medium-term budget policy statement (MTBPS) late in 2021.
Godongwana said at the time that the government had spent R290bn in assisting SOEs since 2013 at the expense of important social expenditure. “We must be prepared to consolidate some of our SOEs and let go of those that are no longer considered strategically relevant,” Godongwana said.
In the MTBPS, two new amounts for SOEs were announced — R2.9bn for Denel to settle guaranteed debt and R11bn for Sasria to settle claims arising from rioting in KwaZulu-Natal and parts of Gauteng. In the previous fiscal year, about R21bn was given to SAA. Denel received about R2bn in the last two fiscal years, Eskom has received about R136bn out of the government’s 10-year R230bn commitment, and another R10bn was committed to Land Bank.
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