Minister of Public Enterprises Pravin Gordhan has told fund managers and investors that establishing a state asset management company will result in a fundamental change in the fate of state-owned entities (SOEs) to benefit future generations.
The minister spoke at a virtual investment conference this week hosted by the Department of Public Enterprises (DPE) and financial services group Investec.
His remarks follow years of SOE mismanagement in South Africa, which has seen these entities embroiled in corruption scandals.
There is also widespread concern that two of the country’s critical SOEs, Transnet and Eskom, continue to operate without permanent CEOs, while both face operational crises that continue to hamper the country’s economy.
“That paradigm shift is not about what we want to achieve in the next three or six months. This is about laying the foundation for a multi-generational process that will benefit future generations.
“Another element of the paradigm shift is to be able to [effectively] combine commercial outputs and requirements of each of the SOEs with our developmental obligations,” Gordhan added.
In September, the state approved and released the National State Enterprise Bill for public comment. The draft law, if successful, will make way for the asset management firm that will consolidate all SOEs under a single entity.
Gordhan said the draft law provisions would see SEOs drive “meaningful returns” for the economy and achieve the country’s development goals.
The government claims that the new entity – which will eventually see the phasing out of the DPE – will help insulate the firms from political interference by separating policymaking and regulatory processes from operations.
Public comment on the draft law remains open until 15 October.
Listen as Jimmy Moyaha chats with Khaya Sithole about the leadership crisis at SOEs (or read the transcript here):
You can also listen to this podcast on iono.fm here.