23 February 2018

South Africa: Taking Charge of Our State-Owned Enterprises

opinion

Our State-owned Enterprises (SoEs) simply do not provide a suitable return on investment and their social returns are not particularly good either. This means that a restructuring of SoEs is now inevitable.

President Ramaphosa's inaugural State of the Nation Address made it clear that he intends to fix the growing problem of our State-owned Enterprises (SoEs).

We should first understand the scope of the problem. A Presidential Review Committee (PRC) reported its own findings in 2012. There are various forms:

State-owned entities are any public entity defined in the Public Finance Management Act (PFMA);

State-owned Enterprises are those listed in Schedule 2 of the Public Finance Management Act and are also known as "government business enterprises";

A "state-owned company" refers to SoEs that are also governed by the Companies Act.

It is with these that urgent remedial action is required.

When the Presidential Review Committee submitted its report, it had developed a database of approximately 715 state-owned entities (including chapter 9 institutions) and this number was not the final tally.

As the Presidential Review Committee report noted, this large number calls into question the capability of the government to provide effective oversight for all of them....

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