Department of public enterprises will cease to exist, Ramaphosa tells MPs

One of the first government departments that will cease to exist is the department of public enterprises as the state’s reconfiguration process gets underway.  

This is what President Cyril Ramaphosa told parliamentarians during his first question and answer session in the National Assembly on Thursday where the downsizing of government departments took center stage.  

“The ministry of public enterprises will cease to exist because the entities overseen by the minister of public enterprises will revert back to their departments. 

“ The coordinating structure, which is your state-owned enterprise (SOE) holding company which is going to enhance proper coordination, give us all line of sight of what’s happening in our state-owned enterprises, financial discipline that should be there and benefitting from economies of scale when it comes to procurement and governance systems, will be housed in a state-owned enterprise holding company,” said Ramaphosa.  

The president was responding to a question put to him by the IFP’s Mkhuleko Hlengwa, who asked the president to tell the nation whether he intended to dissolve the department of public enterprises and house state-owned enterprises in their respective line function departments.  

Ramaphosa said: “That ministry is in the process of putting together the legislation and the way through which this company is going to function, so that is the way we are going to function.”

Beyond that, Ramaphosa said government was going to also look at the merger of some departments so there is a more effective executive with fewer ministries. 

He said the country has more than 100 SOEs which play a crucial role in the provision of public goods and infrastructure to enable economic growth. 

In his state of the nation address last month, he announced government was taking “far-reaching” reconfiguration of SOEs. 

“This work, which will review the role of all departments, including the department of public enterprises, will inform the configuration of government going into the next administration. 

“This process of reconfiguration takes the overall approach that SOEs that operate in specific sectors of the economy should be placed under the relevant government departments.”  

This is the case for most SOEs, he said, with the only exception being the seven state-owned companies that fall under the department of public enterprises. 

“The reconfiguration process is supported by the work of the Presidential SOE Council, which, among other things, has made proposals to strengthen the framework governing SOEs and determine an appropriate shareholder ownership model.”  

 He said among the recommendations of the Presidential SOE Council is the adoption of a centralised shareholder model for the management of SOEs and that a state-owned holding company be established to house strategic state-owned companies (SOCs) and exercise coordinated shareholder oversight.  

“This will delineate the functions of policymaking and regulation from the shareholding and operations of those SOCs. Policy-making and regulation will reside in the relevant departments.”

He said a holding company will instill effective governance and enhance the efficiency of SOCs to achieve government’s developmental objectives, ensure increased transparency and accountability and promote the commercial sustainability of SOCs. 

“A state-owned holding company would enable streamlined governance processes, transparent financial systems, economies of scale in procurement, shared transactional services and adequate funding to SOEs to fulfil their respective mandates,” he said.   

The SOE council is in the midst of an in-depth exercise to establish the strategic and developmental role of each SOE, their financial position and operational capabilities, said Ramaphosa. 

“The council will make recommendations on which SOCs could be placed in the proposed holding company.”  

In a follow up question Hlengwa put it to Ramaphosa that he was not committed to his own commitments in so far as the reconfiguration of government was concerned. 

“In 2018 you said, as indicated in the state of the nation address, we have begun the review of the reconfiguration, size and number of national ministries and departments. 

“In 2019 you said to promote greater coherence, better  coordination and improve deficiency we have combined a number of portfolios. In 2023, Mr President, you said ‘the presidential SOE which I appointed in 2020 has recommended government adopt a centralised shareholder model for its key commercial state owned companies’.”  

Hlengwa continued to remind Ramaphosa that again in 2023 he said he has instructed National Treasury to work together with the Presidency to rationalise entities and programmes over the next three years.  

“Every year and every Sona you kick the can down the road. However, Mr President, is an indictment on you wherein it says the department of public service and administration in April 2019 handed over to the president a substantive report on the macro-reorganisation of the state. It was never done.” 

Hlengwa said instead, referring to a News24 report, what has happened is when government and ministers fail Ramaphosa places them under the presidency. 

“Are you committed to the commitments you made to the public, country and economy because it seems as if everything you say does not happen?” said Hlengwa. 

Ramaphosa responded by telling Hlengwa that prior to 2019 there were 34 ministries. 

“I reduced that 28. I did also say the objective is to reduce further and recently what I did say at Sona was that the Treasury and Presidency, including the department of public service and administration, are going to look at how we further reconfigure.”  

He said he wanted to go below 28. 

“This time around, because we are dealing with two key problems, the one being  electricity, and I did say I would like to appoint a minister of electricity, which will increase the number of ministries to 29.  

“In the course of looking at everything, including enhancement of the capability of the state and the implementation process to get us over these challenges we are having, I decided we needed a ministry stand alone for the monitoring and evaluation to make sure there is full implementation.” 

“I have clearly said this is a transitory process and there has been clear transparency on this. The work we need to get done is the type of work on which we need to focus attention and the work is done in the next 12 to 15 months.”

“In the next administration when this party (ANC) will be back as the governing party, we will come back and reconfigure the state following the report that will come.”

The DA’s John Steenhuisen asked Ramaphosa if he was in possession of the report and what has he done about it since 2019.  

Ramaphosa said the report from the public service has dealt with the issues of reconfiguring and how some departments can be merged. 

“For the departments to be merged, we found, as we did in 2019, that it takes quite a while because all of a sudden you will have two director-generals and as you bring the functions together it tends to take a great deal of time.”  

He denied his administration had the most bloated cabinet in the world “by any means”.  

“I have looked at a number of cabinets around the world and I have found we are in line. Having had 28 ministers to 30, I have stated clearly the reason for that and I have also said it was a timebound increase and we are going to revert back to much less than 28 because we are dealing with challenges.”

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