President Cyril Ramaphosa’s cabinet has approved, for introduction to parliament, the National State Enterprises Bill which proposes the establishment of a holding company to house all the assets of state-owned companies (SOCs), replacing the department of public enterprises.
On Monday, Minister in the Presidency Khumbudzo Ntshavheni said the establishment of a state-owned holding company would ensure effective oversight of SOCs and separate the operational, regulatory and policy-making roles of the government.
The bill proposes the establishment of the state’s asset management SOC Ltd as a holding company for strategic SOEs, with the state as a sole shareholder.
The government hopes the proposed company will stabilise challenges at SOCs and function in a similar way to Singapore’s Temasek Holdings Ltd and Malaysia’s Khazanah Nasional Berhad.
In the majority of our SOCs, the instability and the failure to perform has been a result of the changes in boards or management, which are mostly driven by changes in political leadership
— Khumbudzo Ntshavheni, minister in the Presidency
Ntshavheni said the establishment of the holding company does not change the decision to place SOCs under line departments.
In terms of governance and appointment of boards and related matters, the holding company will take over to ensure the SOCs are in line with what the policy department is driving.
One of the intentions of establishing the holding company is to remove the appointment of boards from line ministers to the company.
“In the majority of our SOCs, the instability and the failure to perform has been a result of the changes in boards or management, which are mostly driven by changes in political leadership,” she said.
“So this company will insulate that in terms of establishment of boards.”
Ntshavheni explained how newly appointed cabinet ministers would remove boards, even competent ones, and therefore create instability, negatively affecting a company’s performance.
“To offer that stability, you need people who are objective so they can select boards that are effective, skilled, not beholden to a minister or administrators in a particular department. It will provide stability to the companies,” she said.
The decision on which SOCs will be put under the holding company will be finalised in due course.
“We will apply our minds but currently, it is to establish a law through parliament that allows for the establishment of the asset management company, and then have an engagement on which entities are ready to go into that fold.”
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