The release of the National State Enterprises Bill for public comment has created strange bedfellows with both Cosatu and the DA opposing the legislation in its current form.
The bill outlines the government’s plans to establish a single holding company for state-owned enterprises (SOEs). Though the ANC-aligned Cosatu and the DA have previously clashed on labour related issues such as broad-based BEE, the national minimum wage and compensation for public workers, both argue that placing SOEs under a single company could be cumbersome considering the vast array of SOEs.
The draft legislation was released on Friday and paves the way for the establishment of a state asset management company, which would be used to phase out the department of public enterprises and move strategic SOEs from government departments to the holding company.
The establishment of the holding company falls to planning, monitoring & evaluation minister Maropene Ramokgopa after the dissolution of the public enterprises department which was responsible for five SOEs in its portfolio.
Ramokgopa was quoted by Bloomberg as planning to list the SOEs on the JSE, as part of the government’s plans to attract private partners for struggling state companies. Cosatu has opposed this.
“Nowhere in the bill does it provide for that. We would not support that if it did,” Cosatu’s Matthew Parks told Business Day.
“We are also concerned about having a single SOE shareholder council. We fear it being unwieldy given the vastly different array of SOEs ranging from aviation to rail, from broadcasting to defence. The SOEs were once well regarded. They have deteriorated due to corruption, criminality, mismanagement, underinvestment and structural shifts in their sectors.”
The DA says the centralised model for SOEs paves the way for state capture and corruption.
“Individual SOEs should be in a competitive environment and privatised or at least run in joint partnerships, where the technology and expertise lie in the hands of the private sector,” DA MP Darren Bergman said.
“Existing SOEs already report to their relevant ministers with the oversight of parliamentary committees. This is to ensure we move towards the recommendations of the Zondo commission, where the executive can be fully held to account.”
Department of planning, monitoring & evaluation spokesperson Litha Mpondwana said the idea of listing SOEs on the JSE was one of the potential areas of collaboration that had been talked about to promote the commercial sustainability of SOEs, such as raising capital.
“It is part of the intent to advance collective action through public-partnerships to increase investment for the country’s SOE and infrastructure reforms,” Mpondwana said.
“The idea of potentially listing SOEs at the JSE is not a plan, but it was discussed between the minister and the JSE in the context of potential areas of collaboration between government and the JSE, within the mandate of the department of planning, monitoring & evaluation. So it should be seen in that context.”
Under the envisioned centralised model, the state will be the sole shareholder of the asset management company but the door is open for strategic equity partners to be brought into the underlying SOEs.
The bill provides for the granting to the proposed holding company of budgetary and managerial independence, a departure from the current ownership model in which government departments oversee the functioning of their agencies.
The government has pitched the new ownership model as necessary to reducing political interference, which had previously led to the demise of Eskom and Transnet — the backbone of SA’s energy and transport infrastructure.
Update: January 20 2025
This story has been updated with additional information.
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