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Cape Town - “We will intervene decisively to stabilise and revitalise state owned enterprises,” promised new SA President Cyril Ramaphosa during his maiden State of the Nation Address in Parliament on Friday.
What SA's newly-elected head of state would say about the country's state companies, many of which stand accused of poor performance, maladministartion and a reliance of government bailouts, was among the most anticipated aspects of his speech.
“The recent action we have taken at Eskom to strengthen governance, root out corruption and restore its financial position is just the beginning,” he said.
Ramaphosa, at the time still Deputy President, in January had ordered Eskom to appoint a new board and fire all executives accused of corruption and maladministration.
The two top executives he mentioned by name, former CFO Anoj Singh and top executive Matshela Koko, have both since resigned.
Koko, who had fought to stay on despite being asked to step down by both Ramaphosa and Eskom’s leadership, on Friday submitted his letter of resignation to the power utility, saying it was in the best interest of his family.
Structural costs
“We will need to confront the reality that the challenges at some of our SOEs are structural – that they do not have a sufficient revenue stream to fund their operational costs," he said.
“These SOEs cannot borrow their way out of their financial difficulties, and we will therefore undertake a process of consultation with all stakeholders to review the funding model of SOEs and other measures.”
Ramaphosa did not indicate his thinking on how the funding model would be changed, or how the revenue stream could be boosted.
“We will change the way that boards are appointed so that only people with expertise, experience and integrity serve in these vital positions,” he said.
The quality and composition of the boards of state companies has come under scrutiny in recent years.
Eskom board members, for one, were repeatedly dragged over the coals by MPs for not carrying out their oversight role.
Ramaphosa promised to change how tenders work.
“We will remove board members from any role in procurement and work with the Auditor-General to strengthen external audit processes,” he said.
One of the most outspoken critics of SOE boards is former finance minister Pravin Gordhan, whose name has been linked to a possible return to Cabinet.
“You’re not putting your own money in, and taking your own risks where if you misbehave, you have taken the risk and you’ve lost,” he said in 2017 . “This is public funds you’re risking at the end of the day. It’s a different proposition. So don’t play around with institutions where public funds are at stake.”
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