A 12-strong presidential committee has been given 11 months to conclude a review on the effectiveness and future of state-owned enterprises (SOEs) including Denel and Armscor. Minister in the Presidency for Performance, Monitoring and Evaluation Collins Chabane says the presidential SOE committee will release an interim report in February and its findings on September 1 next year
There are an estimated 300 SOEs, of which only the nine major ones, including Denel and South African Airways, report to the Department of Public Enterprises. The balance report to various ministries, provinces and municipalities; examples including Armscor that answers to the Ministry of Defence and Military Veterans.
Committee chairwoman Riah Phiyega says the governing African National Congress has taken a conscious decision that there is a need for the government to intervene in the economy. “State-owned enterprises are an important tool, among others, that can enable the state to intervene in the economy. The government can use this platform for strategic economic growth and to create human capital,” Phiyega said at a media conference yesterday. She notes the review will delve into the performance of SOEs pre- and post-1994, while considering best practices elsewhere in the world. It will look at how effective SOEs have been in delivering services and consider which of the enterprises should be boosted and which done away with, to best utilise resources.
The review will also look at the funding of SOEs, the investment of the state in strategic sectors, such as energy and agriculture, how these enterprises can help build a developmental state, remuneration of organisation heads and how these enterprises can develop their skills base. The committee will further look at standardising accounting functions, constructing a clearer definition of what organisations constituted SOEs. It also will set up a database of all SOEs.
SOEs are governed by various legislation and the committee was looking at what needs to be done to create a broad definition and governance structure for SOEs generally. Phiyega emphasised that SOEs remained central to the government’s plan to develop the country economically. She noted that since the announcement by President Jacob Zuma on 12 May of the establishment of the committee, members have held seven workshops and had been engaged in setting up a secretariat and developing the committee’s mandate and terms of reference. During this time, the committee had also started negotiating with partners, such as the Human Sciences Research Council, to set up a research unit.
The committee will also be working with the Organisation for Economic Co-operation and Development and it plans to adopt some of the organisation’s approaches to state-owned firms in its review.
In total, 21 issues will be interrogated, the Business Report newspaper noted, grouped under five headings: development and transformation; ownership and governance; viability; strategic and operational effectiveness; and research and development. Phiyega added that the committee would look at what had happened with transformation within these companies, and whether there was an ownership policy that gave guidelines that should be followed if an SOE was to be established.
Besides Phiyega, who is currently corporate affairs executive at Absa, having previously held senior positions at Transnet, the Engineering News has noted other members of the committee include: Glen Mashishi, CEO of Nullarbor Management Consultancy Services; former Transnet CEO Mafika Mkhwanazi, who currently serves as a nonexecutive director at a range of JSE-listed companies; Deon Crafford, of Barnstone Holdings; Swazi Tshabalala, CEO of the Industrial Development Group; Dawn Morole, who has been a director of a number of large companies; Pramod Mohanlal, of Nedbank; Gugu Ngcobo, who has cultural industry and telecommunications experience; Professor Mbulelo Mzamane, an academic, who previously served as the vice-chancellor and rector of the University of Fort Hare; Dr Takalani Madima, a lawyer, who is currently adjunct professor of law in commercial law at the University of Cape Town; Lumkile Mondi, the chief economist of the Industrial Development Corporation; and Nombulelo Mkhumane, of the Limpopo Economic Development Enterprise.