SOEs must operate outside government, some must close shop: Lynne Brown

19 March 2021 - 12:58
Brown argued, once SOEs were operating outside the government, they should not account to politicians.
Brown argued, once SOEs were operating outside the government, they should not account to politicians.
Image: ESA ALEXANDER

Former public enterprises minister Lynne Brown believes that state-owned enterprises (SOEs) in SA will continue failing as long as they operate within the government.

Brown was testifying at the Zondo commission of inquiry into state capture on Friday.

She said the only solution to save ailing SOEs was to have them operate independently, while some ought to be closed down.

She also added that there were simply too many SOEs in the country - 720 - calling for some with cross-functional mandates to be merged.

Once the country has disentangled SOEs from the government, said Brown, those which are strategic for SAs development and economic growth objectives must be identified and energy invested in those. 

“Other countries have found the solution and in many other countries, they have what is called a reformed state-owned companies structure. So SOEs run as commercial businesses and the commercial business becomes the catalyst for growing the economy,” said Brown.

“I think what we must do with state-owned companies is to take them outside of government, but I am not saying they must be privatised.

“So some of them must be closed down and some must be merged. And we must decide what are the strategic ones that we want to grow and help us grow the economy.”

Brown said countries such as China, Singapore, Norway and the US had done this and it worked. There was no reason it would not work in SA.

Furthermore, Brown argued, once SOEs were operating outside the government, they should not account to politicians.

“A state-owned company must be structured as a commercial company and is not accountable to some politician somewhere.”

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