by President Cyril Ramaphosa says that South Africas state-owned enterprises have mostly been associated in the public eye with state capture, financial mismanagement and inefficiency.
Writing in his weekly open letter to the public, the president said that these enterprises have been struggling to meet their mandates, in addition to needing regular bailouts from the government.
“It is important to remember that the state does not own these companies simply for the sake of it, or because this is what the democratic government inherited from the apartheid state.”
The government’s approach to state ownership is informed by the need for the effective functioning of key network industries, such as energy and ports, and by the need to ensure that the basic needs of all South Africans, particularly the poor, can be met, he said.
“We firmly believe that public ownership is necessary for critical sectors of the economy and that the country needs robust SOEs that are able to drive economic growth and transformation.
“This is particularly the case in the delivery of public goods such as electricity and water, where SOEs are able to pursue a developmental mandate in the public interest as opposed to a purely commercial one.”
Ramaphosa said that his government has now made it a priority to turn these companies around, to root out corruption, to improve their governance and to enable them to play the role they should in driving economic growth and employment creation.
“To this end, we have embarked upon a number of reforms to strengthen these SOEs so that they can produce the results that the country needs and expects. These reforms are not intended to weaken the public sector or to reduce its role, but to make it a more dynamic and effective part of our economy.”
Given the number of SOEs and the differences between them, Ramaphosa said the government will not apply a blanket policy to these reforms.
An intervention that works for one SOE may not be appropriate for another, requiring a case-by-case approach, he said.
Ramaphosa pointed to the restructuring of Eskom into three different state-owned entities, responsible for generation, transmission and distribution respectively. This is because the previous structure of Eskom was ill-suited for a changing energy landscape. It had become inefficient and costly and was not sufficiently transparent.
These reforms will give Eskom the space to address its financial and operational challenges and provide a clear path towards a more efficient, financially sustainable state-owned utility that is able to provide cheaper, cleaner energy to all South Africans, he said.
“Our policy remains that SOEs must play a crucial developmental role in supporting the growth of our economy. Our task is to place them on a sound footing so that they can serve their ultimate shareholders the South African people.
“This will enable these companies to fulfil the task for which they exist to foster inclusive economic growth, to promote the creation of jobs across the economy and to ensure all South Africans receive affordable quality services.”
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