Cape Town - Government's review of state-owned enterprises (SOEs) will be dead in the water without a clear vision of what the state expects from these entities: a profit objective - or service delivery.
This mandate, however, proves to be the political sticking point that prompted President Jacob Zuma's decision in May to appoint an independent panel to review parastatals. Public Enterprises Minister Barbara Hogan, who had previously raised temperatures in the cabinet and ANC alliance with her views on what was required to fix SOEs, was already leading an SOE review.
While Zuma explained that the panel would provide an "independent perspective", the confusion around the different reviews was further complicated this week when the presidency and Hogan's office confirmed that the Hogan-led review had been ditched.
The presidency, however, then issued a statement saying that both reviews would still be considered and regarded as complementary. Hogan's office was not available for comment.
According to Ernst & Young governance specialist Lindie Engelbrecht, another sticking point for parastatals is that they are regulated by multiple, often conflicting laws.
Over and above the founding legislation, which sets out the mandate of each parastatal, they are bound by the Public Finance Management Act (PFMA) as well as the Companies Act of 2008. The PFMA and Companies Act conflict in several areas.
"The governance structures are messy," said Engelbrecht. She pointed out that governance becomes muddled, complicated and often contested in a situation where government is shareholder and appoints the board, CEO and chairperson as well as having an oversight responsibility through the department of public enterprises.
Zuma unable to do what's best for SA
"The aim should be to simplify the legal and governance framework and to bring it in line with international trends," said Engelbrecht.
This was in line with Pan African Capital Holdings CEO Iraj Abedian's argument about depoliticising SOEs.
"What needs to be done is not to subject them to more politics or debates about privatising them. It is not about reinventing the wheel. The key is to subject them to a process of rigorous professionalisation," said Abedian.
Centre for the Study of Democracy associate Eusebius McKaiser agrees: "You do this not by deploying a cadre to head Transnet Freight Rail but rather appointing someone with a nerdish, career-long obsession with trains and goods.
"That is the sort of person who will get excited about what business teachers call spaghetti charts and figuring out how to untangle them. Such folks have the know-how to help a team think through the operational inefficiencies that prevent a place like Transnet from having trains that run at the optimal turnaround time when they take coal to customers such as Eskom."
While Zuma has already explicitly ruled out the possibility of the ANC doing away with political appointments, political analyst Aubrey Matshiqi said the SOE review is complicated by the fact that Zuma was politically compromised before he was even elected as ANC president.
This meant that when it comes to powerful political and personal interests that continuously push various agendas in his cabinet and in the ANC alliance, Zuma is unable to cut through them and enforce decisions that are in the best interest of the country and its long-term development.
- Fin24.com
This mandate, however, proves to be the political sticking point that prompted President Jacob Zuma's decision in May to appoint an independent panel to review parastatals. Public Enterprises Minister Barbara Hogan, who had previously raised temperatures in the cabinet and ANC alliance with her views on what was required to fix SOEs, was already leading an SOE review.
While Zuma explained that the panel would provide an "independent perspective", the confusion around the different reviews was further complicated this week when the presidency and Hogan's office confirmed that the Hogan-led review had been ditched.
The presidency, however, then issued a statement saying that both reviews would still be considered and regarded as complementary. Hogan's office was not available for comment.
According to Ernst & Young governance specialist Lindie Engelbrecht, another sticking point for parastatals is that they are regulated by multiple, often conflicting laws.
Over and above the founding legislation, which sets out the mandate of each parastatal, they are bound by the Public Finance Management Act (PFMA) as well as the Companies Act of 2008. The PFMA and Companies Act conflict in several areas.
"The governance structures are messy," said Engelbrecht. She pointed out that governance becomes muddled, complicated and often contested in a situation where government is shareholder and appoints the board, CEO and chairperson as well as having an oversight responsibility through the department of public enterprises.
Zuma unable to do what's best for SA
"The aim should be to simplify the legal and governance framework and to bring it in line with international trends," said Engelbrecht.
This was in line with Pan African Capital Holdings CEO Iraj Abedian's argument about depoliticising SOEs.
"What needs to be done is not to subject them to more politics or debates about privatising them. It is not about reinventing the wheel. The key is to subject them to a process of rigorous professionalisation," said Abedian.
Centre for the Study of Democracy associate Eusebius McKaiser agrees: "You do this not by deploying a cadre to head Transnet Freight Rail but rather appointing someone with a nerdish, career-long obsession with trains and goods.
"That is the sort of person who will get excited about what business teachers call spaghetti charts and figuring out how to untangle them. Such folks have the know-how to help a team think through the operational inefficiencies that prevent a place like Transnet from having trains that run at the optimal turnaround time when they take coal to customers such as Eskom."
While Zuma has already explicitly ruled out the possibility of the ANC doing away with political appointments, political analyst Aubrey Matshiqi said the SOE review is complicated by the fact that Zuma was politically compromised before he was even elected as ANC president.
This meant that when it comes to powerful political and personal interests that continuously push various agendas in his cabinet and in the ANC alliance, Zuma is unable to cut through them and enforce decisions that are in the best interest of the country and its long-term development.
- Fin24.com