On August 29, 2023, South Africa’s President Cyril Ramaphosa held a critical meeting with the chairpersons and chief executives of strategic state-owned enterprises (SOEs) at the Union Buildings. The meeting aimed to discuss measures to stabilize the financial and operational performance of SOEs and unlock their full economic potential.
Reforms to Address the Legacy of State Capture
Since 2018, the South African government has been actively involved in a reform process to address the damaging legacy of state capture in SOEs. The strategy includes the appointment of capable leadership, the recovery of stolen assets, and the pursuit of those responsible for acts of corruption. Additionally, through a program called Operation Vulindlela, the government is implementing fundamental reforms in key sectors such as energy, logistics, and water to tackle structural challenges and position SOEs for future success.
Accelerating the Reform Agenda
During the meeting, President Ramaphosa urged management and boards of SOEs to accelerate the reform agenda and fulfill their developmental mandates. He highlighted the critical role of SOEs as strategic national assets, driving inclusive growth, investing in infrastructure, and creating jobs.
Recommendations by Presidential State-Owned Enterprises Council
The Presidential State-Owned Enterprises Council (PSEC), appointed by President Ramaphosa in 2020, presented a report on their efforts to advise the government on revitalizing and repurposing strategic SOEs. The Council has conducted in-depth analyses of 21 SOEs to inform its recommendations. Proposed changes include adjustments to the governance framework and shareholder ownership model, with the aim of enhancing oversight, separating ownership from policy and regulatory functions, and leveraging the combined balance sheet of SOEs.
Review of the Procurement System
Furthermore, the National Treasury provided an update on its review of the procurement system, with the goal of implementing recommendations from the Commission of Inquiry into State Capture. Legislative and regulatory reforms are underway to strike a balance between fostering innovation, agility, and responsiveness in procurement and ensuring transparency and integrity.
Crucial Role of SOEs in Economic Recovery
President Ramaphosa emphasized the crucial role of SOEs in South Africa’s economic recovery. He said, “It is quite clear that the success of our economic recovery relies on the effective functioning of state-owned entities. We are implementing reforms to ensure that SOEs are able to adapt to new economic conditions, including rapid developments in technology, their respective operating environments and changing global trends, and to serve the country well into the future.”
As South Africa faces the challenges of economic growth and transformation in the 21st century, President Ramaphosa’s commitment to prioritizing the turnaround of SOEs signals a promising step towards harnessing their potential for the country’s long-term success. By implementing the much-needed reforms and driving a renewed sense of purpose and responsibility, South Africa’s SOEs can become the catalysts for a new era of progress and prosperity.
