Johannesburg – Deputy President Cyril Ramaphosa acknowledged this week that the South African public has lost confidence in some big state-owned enterprises (SOE).
Ramaphosa was answering questions related to the economy in the National Council of Provinces on Wednesday.
“We know the public has lost a lot of confidence in many SOEs because of many things happening therein. The objective of the IMC [Inter-Ministerial Committee] is to make sure our people regain public confidence.”
While the deputy president said that some of the big SOEs were performing "poorly", he added that many of the country's 720 SOEs were functioning well, with sound oversight and governance.
Ramaphosa said that SOEs should have qualified and ethical boards with competent staff.
The process of board appointments should be well-planned, formal and transparent. Transparency, said Ramaphosa, would increase accountability, sound administration and good governance practice.
“We want our SOEs to be well-functioning companies that are profitable and that will be delivering on the dual mandate - a developmental mandate, and a profitability mandate,” he said.
Ramaphosa said that government was addressing problems at SOEs. "We have done full diagnosis, we know what the problems are," he said.
The IMC will soon submit a second draft of its governance shareholder oversight policy to Cabinet. He said this would "clarify mandates and regulate lines of accountability (at SOEs)".
"The draft policy outlines the rationale for continued state ownership in key sectors of the economy, and makes proposals for alternative ownership models" he said.
The deputy president did not explain what "alternative ownership models" meant.
State capture
Speaking about the judicial commission of inquiry into State capture, Ramaphosa said the country's resources should be used to benefit its people. “This applies to SOEs. SOEs exist to advance the interests of our people.”
He added that state institutions have the responsibility to investigate allegations of corruption of bad governance. “We expect they will act with whatever information they have, be it emails or other forms of evidence they may have. Many of these things have been spilling out.”
South Africans could expect these institutions to deal with these matters without fear or favour. “Let us give them an opportunity and a chance to do their work. They are accountable to us as people of South Africa to do their work.”
At international rating agency Moody’s 12th annual Sub-Saharan African Summit on Wednesday, vice president and senior analyst of the Sovereign Risk Group Zuzana Brixiova said the ratings agency would be closely watching reforms at SOEs. Moody’s has South Africa’s credit rating at Baa3 with a negative outlook.
Brixiova said that decreasing the value of government guarantees to SOEs, among other factors, would change the outlook from negative to stable.
However a downgrade to junk status would take place if the strength and independence of institutions diminished. Liquidity pressures at SOEs that require further government intervention also remain a risk, she said.
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