Ramaphosa thrashes out woes with leaders of state entities

President puts emphasis on the critical social role that SOEs play

06 June 2019 - 07:49

By Luyolo Mkentane

President Cyril Ramaphosa met the executive leadership of state-owned enterprises (SOEs) in Pretoria on Wednesday to hear their views on the challenges they face and the opportunities they have identified to strengthen the sector.

The meeting came a day after data from Stats SA revealed that the GDP declined by 3.2%, or R56bn, in the first quarter of 2019.

It also followed the resignations of Vuyani Jarana and Phakamani Hadebe as CEOs of national carrier SAA and power utility Eskom respectively, as the government struggles to keep the embattled state-owned entities operational.

SAA and Eskom have a combined outstanding debt pile nearing R500bn, and the latter has been described as the biggest single risk to SA’s economy. In February the government announced a record R69bn bailout for Eskom to be paid over three years.

“President Ramaphosa requested the meeting to hear the views of the executive leadership of strategic state entities on the challenges they confront in implementing their mandates and the opportunities they have identified to strengthen this sector,” a statement from the presidency said last night.

Ramaphosa is said to have emphasised the critical role of the state companies in meeting social needs and driving economic growth. He also reaffirmed the government’s will to strengthen these entities and ensure their sustainability.

“He noted that several entities are facing severe financial and operational challenges that pose great risks to the South African economy,” the presidency statement said.

“In their contributions, several executives highlighted the need for a better definition of the respective mandates of state- owned companies and for government policy to more effectively support their achievement.

“The executives raised a number of concerns about the legal and regulatory environment within which SOCs [state-owned companies] operate, which are often ill-suited to the specific needs of entities and constrain innovation. They also raised challenges about the exercise, by government shareholder representatives, of their oversight responsibility and inconsistency in the appointment of boards,” the presidency said.

The executives who attended the meeting, among others, came from Airports Company of SA, Alexkor, Armscor, Air Traffic and Navigation Services, Central Energy Fund, Development Bank of SA, Denel, Eskom, Industrial Development Corporation, Land Bank, SA Nuclear Energy Corporation, PetroSA, Passenger Rail Agency of SA, Rand Water, SA Express, SAA, SABC, SA Forestry Company, SA National Roads Agency, SA Post Office, Trans-Caledon Tunnel Authority, Transnet and Umgeni Water.

Wits School of Economics senior lecturer Lumkile Mondi said it was not surprising for Ramaphosa to meet the executives, given that he had just been reappointed to the highest office in the land with a mandate.

“He was basically sharing with them his strategy going forward under the new dawn,” Mondi said. “He wanted them all there so that he can articulate his position and how he sees them playing a role going forward.”

The meeting should not be seen in the light of the recent resignations at SAA and Eskom, he said.

Ramaphosa said: “This engagement has raised several critical areas that limit the ability of SOCs to drive growth and development. These range from inadequate capitalisation and poor governance to outdated legislation and political interference. As government, we are committed to work with the leadership of SOCs and stakeholders to urgently address these difficulties.”

The inputs made by the executives at the meeting will form part of the initial programme of the Presidential SOC Council, announced by the president earlier in 2019, to provide political oversight and strategic management to reposition and revitalise the utilities as “catalysts for economic growth and development”.

mkentanel@businesslive.co.za