Strong calls for Ramaphosa to fix SOEs | Fin24
 
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Strong calls for Ramaphosa to fix SOEs

Feb 19 2018 21:00
Lameez Omarjee

Cape Town – Members of Parliament called on President Cyril Ramaphosa to clean up state-owned enterprises (SOEs) and to have those implicated charged and removed.

The governance at SOEs was a topical issue for discussion at the debate of the State of the Nation Address (SONA), at Parliament on Monday.

ANC chief whip Jackson Mthembu, who welcomed Ramaphosa’s intentions to stabilise and revitalise SOEs, said that the integrity of SOEs and government departments must result in a well-functioning and capable state.

On Friday, delivering his maiden SONA, Ramaphosa announced structural changes to SOEs in terms of their funding models and boards.

Leader of the opposition, Mmusi Maimane, lauded the President’s plans to end cadre deployments and appoint competent and experienced people on boards. However, Maimane said that changing boards is not enough.

He added that SOEs like SAA can no longer be bailed out with public funds, but should be privatised instead. “There is no benefit for the public to keep paying for failing companies,” he said.

Maimane also said that the monopoly at Eskom should end and that independent power producers should be embraced.

ANC MP and member of the portfolio committee on public enterprises Mondli Gungubele reminded Parliament that the role of SOEs in a developmental state is not to maximise profits, or incur losses. SOEs exist to drive transformation and development, he said.

Gungubele added that SOEs need to find a balance in achieving the required level of self-funding for development projects the private sector would not ordinarily invest in. He said that hopefully the inquiry into state capture would answer questions as to how SOEs have ended up in the state they are in.

Part of the lapse he believes is that there has been limited oversight of companies over many years.

Gungubele said that SOEs play a role in attracting investment to economies.

“The quality of governance in SOEs is the single most important factor which informs decision making of investors, both foreign and domestic, when they judge a country as a possible destination to make a potential investment.”

He explained that the investor community is looking for an environment with conditions for them to make long-term investments in the country. Contributing factors to this includes having democratic principles, policies and processes and the governance of SOEs.

But in South Africa, the governance of SOEs has placed pressure on the fiscus, said Gungubele.

He suggested government audit SOEs periodically to ensure the purpose and rationale of their existence and to determine if they can be sustained based on the evidence or outcomes of such an audit.

Secondly, there should be oversight by government. In some cases where oversight has failed, it must be strengthened to be effective, he suggested.

Gungubele added that board management should exercise its legal duties without undue influence. There should also be a separation of roles. Directors should not interfere with operations.

DA MP and member of the portfolio on public enterprises Natahsa Mazzone said that the state of SOEs was shameful. She also called for Ramaphosa to sack Public Enterprise Minister Lynne Brown from her position.

Brown is yet to respond to Fin24’s request for comment on calls that she be removed.


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