Government plans to establish a centralised shareholding company to help it control its existing state-owned enterprises, says president Cyril Ramaphosa.
Responding to questions in parliament on Thursday (17 March), Ramaphosa said he views state-owned enterprises are critical drivers of inclusive economic growth and social development in the country.
“However, the reports released by the commission of inquiry into state capture demonstrate the extent of the repurposing, damage and theft caused by state capture, he said
“We are therefore working to reposition strategic SOEs to fulfil their vital economic and social mandates.”
International good practise suggests that a centralised shareholder model – along with a central authority to house strategic state-owned companies – is the best way to ensure effective oversight, the president said.
Ramaphosa said a centralised shareholder management model is likely to entail the following:
- Firstly, a holding company that is 100% owned by the state.
- Secondly, an active shareholder approach to continuously set, monitor and evaluate SOE performance in relation to commercial and development objectives.
- Thirdly, ensuring commercial sustainability of SOEs with minimum or no reliance on the fiscus.
- Fourthly, the development of an appropriate capital structure for the holding company to ensure profitability and sustainability of each SOE.
Ramaphosa said the government is currently reviewing state ownership policy in terms of which SOEs need to be owned by the state as well as the extent thereof.
“The presidential SOE Council is evaluating the financial and operational status of the major SOEs and reviewing the turnaround plans for each SOE in crisis.
“The journey that we have embarked on will transform the manner in which SOEs are governed and managed for the benefit of the nation as a whole. This is a transformation that is long overdue.”