Cabinet approves measures to improve SOEs

Cape Town – At a special two-day meeting this week, Cabinet discussed recommendations from the Inter-Ministerial Committee on State-owned Enterprises (SOEs) to make these entities more financially viable and efficient. 

Cabinet issued a statement on Thursday, outlining the decisions that have been taken to implement an overarching central policy that will govern SOEs. 

READ: Zuma releases guide for new era of state-owned entities

These measures aim to strengthen the SOEs’ developmental objectives and include: 

- the setting up of a private sector participation framework whereby the private sector will have bigger involvement with infrastructure development at SOEs and a closer collaboration between the two parties; 

- a new guideline for the remuneration and incentive standards for directors of SOEs; 

- a guideline for the appointment of boards and executives at SOEs (the department of Public Service and Administration will undertake a consultation process with provinces and municipalities before Cabinet approval); 

- a new government shareholder policy which will eventually lead to overarching legislation governing the SOEs; and

- determining developmental mandates for state-owned enterprises to streamline commercial and non-commercial activities.  

These measures are expected to better position SOEs to contribute to building infrastructure, growing the economy, expanding industry and creating jobs. 

South Africa’s SOEs have been fingered by international ratings agencies as a source of concern over their financial management and governance instability. 

READ: Moody times for state enterprises 

The inter-ministerial committee, headed by Deputy President Cyril Ramaphosa, has been tasked with looking at doing away with non-strategic SOEs and options for partial privatisation. 

Government, however, is not willing to entertain full privatisation as it deems SOEs as crucial vehicles to meet the goals of a developmental state. 

SOEs however have cost taxpayers large amounts of money and made losses of billions of rand in the 2015/16 financial year. 

In addition, some SOEs, such as Eskom and Denel have been mired in controversy over allegations that they have been used to advance the interests of politically connected individuals.