Gigaba to step up SOE oversight

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Going forward, the Department of Public Enterprises will exercise a “hands-on, robust” approach to ensuring state-owned-enterprises (SOE) meet policy standards. That’s the word from public enterprises minister Malusi Gigaba.

SOEs play an important role in developing a country because they can provide key support to the economy and the jobs necessary to eradicated poverty and inequality, Gigaba added. “These enterprises can further assist in solving the challenge of acceleration of industrialisation and reducing the country’s reliance on exports by developing intermediate and advanced manufacturing capabilities.
“SOEs have a role to play in this process, both through procuring in a manner that promotes industrial investment and through making direct targeted investments in these capabilities,” said Gigaba.

It is for these reasons, among others, that the department will continue to engage with these enterprises and ensure they run optimally, the state BuaNews agency reports. “In view of the above, we have decided to exercise a hands-on and robust approach in order to ensure that the SOEs under our control do meet policy targets,” he said, adding that the department will require strict compliance with the current governance framework.

Individual chairs and CEs of enterprises will meet with the department quarterly to assess compliance while the department will also engage SOEs at their Annual General Meetings while also ensuring stable boards and management. “As we go forward we shall revive the efforts to provide a holistic approach to SOE governance through a dialogue on government shareholder management,” said Gigaba.

The South African Press Association (SAPA) adds that Gigaba believes part of the problem with SOEs in South Africa is that there are more than 400 of them, answering to a variety of other departments and tiers of government. Only nine – including state arsenal Denel and South African Airways – fall within ambit of his department, Gigaba told an international benchmarking seminar in Pretoria.

As a result, there was no common shareholder governance model, resulting in a reliance on “ad-hoc instruments” that may not be suitable for SOEs. Gigaba also spoke of a need to ensure SOEs had stable boards and management, and that they were financially viable, SAPA added. “In this regard, we have to ensure that there is alignment between the national interest and commercial interest mandates.”

From a governance and oversight perspective, Gigaba said they would interrogate and provide guidance on, amongst other things, the optimal funding structures for projects to be undertaken by SOEs, the best governance structure for SOEs under the department’s care, and guidance for the recruitment and appointment of board members.

The department will also ensure that oversight documents are made public so that the public is informed of what is expected of enterprises so that these enterprises are publicly accountable.

The aim was to inspire economic growth and meet people’s demands for a better life. The two-day seminar that wraps up today is hosted by the presidential review committee on SOEs, in collaboration with the Organisation for Economic Co-operation and Development.

The Cape Argus reported in October that Gigaba’s colleague, Minister of Defence and Military Veterans Lindiwe Sisulu was keen to establish “closer relations with the defence industry.” The broadsheet reported Sisulu that said while the post-1994 decision to have state entities such as Denel and Armscor report to the ministers of public enterprises and trade and industry [sic, Armscor reports to the defence ministry] was logical at the time, it was not sustainable. “It is in our interests that we promote the defence industry – it is what all ministers of defence do.”



But bringing entities such as Denel back into “the defence family” was proving more difficult than she had first thought: discussions were still under way a year down the line, the paper said.