Ramaphosa focuses on the economy, announces SOE clean-up

President Cyril Ramaphosa placed the recovery of South Africa’s battered economy at the centre of his maiden state of the nation address (Sona) on Friday night.

Delivering his first Sona to a joint sitting of Parliament, Ramaphosa said the country was entering "a new era" in which the government would make drastic changes to its affairs.

He said the government would urgently overhaul the appointment of oversight boards of state-owned enterprises (SOEs), which up to now had been plagued by allegations of corruption, financial mismanagement and maladministration.

State-owned firms such as Eskom, South African Airways, Denel and Transnet have made headlines for all the wrong reasons, to the extent that the power utility and the national carrier are on the brink of bankruptcy.

Ramaphosa, who on Thursday took over from former president Jacob Zuma following the latter’s resignation on Wednesday, said non-executive directors would no longer be allowed to take part in procurement at SOEs. This is seen as a response to revelations that board members of parastatals such as Eskom had irregularly influenced the awarding of multimillion-rand contracts to politically connected business people.

The president said the government would also work with the Office of the Auditor-General to tighten the auditing of the finances of SOEs.

"Many of our SOEs are experiencing severe financial, operational and governance challenges, which have affected the performance of the economy and placed pressure on the fiscus," he said. "We will intervene decisively to stabilise and revitalise SOEs. The recent action we have taken at Eskom to strengthen governance, root out corruption and restore its financial position is just the beginning.

"The government will take further measures to ensure that all state-owned companies fulfil their economic and developmental mandates. We will need to confront the reality that the challenges at some of our SOEs are structural – that they do not have a sufficient revenue stream to fund their operational costs."

These SOEs, Ramaphosa said, could not borrow their way out of their financial difficulties, and the government would therefore consult all stakeholders to review their funding model and other measures.

"We will change the way that boards are appointed so that only people with expertise, experience and integrity serve in these vital positions," he said. “We will remove board members from any role in procurement and work with the auditor-general to strengthen external audit processes."

The president also said he would convene an investment conference in a bid to win back foreign investors, and establishing a presidential economic advisory council to find ways of reviving the economy.

"We have to build further on the collaboration with business and labour to restore confidence and prevent an investment downgrade," he said.