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Cape Town - A “deliberate” private sector partnership framework is required as part of the expenditure programmes of state-owned entities (SOEs) to drive towards infrastructure development and economic growth.
That is according to Public Enterprises Minister Lynne Brown, who was speaking at the Inaugural Session of the Brics Forum on SOE Reform and Governance in Chennai, India on Friday.
The forum allows Brics nations Brazil, Russia, India, China and South Africato share their reform and governance practices, identify challenges facing performance and to enhance competitiveness, Brown said.
The forum will affirm the “central role played by SOEs as instruments of socio-economic advancement to implement targeted interventions that accelerate economic growth, skills development, create new employment opportunities, improve infrastructure, improve access to basic services and reduce poverty”, said Brown.
She said the Brics countries should form a strategic alliance “to pursue the reform of state-owned companies”.
“We have entered an era where countries are restructuring and reviewing the role of SOEs to respond to economic growth and development challenges, and diversify the revenue streams to strengthen their economies,” she said.
SOE reform comes as South Africa works to meet its budget deficit targets and stabilise debt as a share of gross domestic product over the medium term, said Brown.
“Continued revenue growth and strict adherence to the planned expenditure ceiling are projected to result in gross debt stabilising at 46.2% of GDP in 2017/18.
“The strategic use of the combined capital expenditure programmes of state-owned companies such as Transnet and Eskom … to drive infrastructure development is crucial,” she said, citing the National Development Plan and the Nine-Point Plan.
“The investment plans of Eskom and Transnet are intended to address existing infrastructure capacity constraints and to create a solid foundation for increased private sector investment to expand productive capacity.
“We believe that this will enable the South African economy to achieve a substantially higher and sustainable pace of economic growth over the medium to long term.
“A deliberate private sector partnership framework is therefore essential.”
The Presidential Review Committee on SOEs is developing a clear policy that defines the role of state-owned companies in the economy, said Brown.
“This will culminate in the development of legislation and provide clarity on the continued state ownership in crucial sectors of the economy through codified shareholder function.”
