The performance of state-owned enterprises (SOEs) came under the spotlight in Parliament, today (Thursday), during the debate of the Department of Public Enterprises Budget Vote.

A number of Members of Parliament (MPs) blamed the “corruption and under-performance” of most entities under the department on weak accountability and lack of clear objectives.

United Democratic Movement MP, Mr Nqabayomzi Kwankwa, said most SOEs have over the years experienced failures due to weak accountability, over-bureaucratisation and unclear objectives.

“It is common knowledge that in South Africa SOEs absorb a substantial amount of resources and actually impose a heavy burden on the fiscus. For proof, one has to look no further than Eskom and the South African Airways (SAA), to mention but a few. These challenges occur despite government initiating a comprehensive review of state-owned enterprises in 2012.

Minister Lynne Brown also came under fire for allowing the controversial return of Eskom’s Group Chief Executive Officer, Mr Brian Molefe, after he resigned last year following his reported implication in the report of the Public Protector on state capture.

Ms Deidre Carter of the Congress of the People said SOEs were central to advancing national objectives through providing economic and social infrastructure. She added that they play a vital role in terms of the direct services they provide.

Their importance is further compounded by the fact that they tend to be concentrated in strategic sectors such as air and rail transport, energy and water supply.

“The unfortunate reality is that many of our SOEs are characterised by major corporate governance failures including weak accountability, chronic under-performance with poor return on government investments and continuous reliance on government support, whether in the form of explicit government guarantees, subsidies and bailouts,” she said.

The Democratic Alliance’s Natasha Mazzone said the country’s SOEs were “not just in a state of chaos, they are in fact in a state of capture”.

“Every single morning, another scandal breaks in the media. The return of (Mr) Brian Molefe will see the Gupta hand return to the power utility, and most likely to the forthcoming nuclear procurement deal. This is something which South Africa cannot accept.

“South Africa is not for sale, our SOEs cannot be bought by the Gupta family with the help of Number 1. The time is now to put a stop to this corruption and capture,” said Ms Mazzone.

The Acting Chairperson of the Portfolio Committee on Public Enterprises, Ms Zukiswa Rantho, said SOEs are very crucial in driving the state strategic objectives of creating jobs and enhancing equity and ultimately transformation.

“The Nationa Development Plan Vision 2030 underlines the key aspects in pursuit of a developmental state, and therefore it is of paramount importance that their state of governance is sound.

Mr Thembinkosi Rawula of the Economic Freedom Fighters questioned the existence of the Department of Public Enterprises and called for its dissolution.

“We call for the dissolution of the Department of Public Enterprises and entities that fall under the department must be moved to other departments, the South African Airways and Transnet must go to the Department of Transport, Eskom must go to the Department of Energy and all other entities to the respective line function departments,” he said.

The Minister defended her department and the performance of its entities, saying they were among the “key economic levers available to the state to give effect to its transformative developmental agenda”.

She said while many private companies have been forced into their shells over the past nearly-10 years of economic sluggishness, state-owned companies have undertaken massive infrastructure and job-creating projects.

“Eskom’s power stations, for example, still receive about 90% of their coal from white-owned companies, some of which have built giant business empires on the back of the guaranteed cash flow these contracts have provided.

“A few weeks ago, at the World Economic Forum on Africa, Transnet revealed a taste of the opportunities that exist on the continent when they invited representatives of companies they have been dealing with in eight countries to join them for a tour of the Port of Durban. Transnet is currently negotiating to develop port, rail and pipeline infrastructure in Senegal, Liberia, Ghana, Togo, Benin, Nigeria, Democratic Republic of Congo and Kenya.

Contrary to the popular narrative being sown (or sowed) out there, the overwhelming majority of goods and services supplied to Eskom, Transnet and Denel, our Big Three, are not supplied by black-owned or empowered companies.

There is enormous scope to transform the profile of suppliers, bring in new companies, and convince owners of existing suppliers to enter into profit-share arrangements with workers, among other measures.

“Our greatest short-term challenge is to confront and overcome the cloud of allegations and counter-allegations. It is clear that state-owned companies’ improvement in performance is non-negotiable and that structural reforms must be accelerated to improve efficiency and strengthen government’s role as a shareholder,” the Minister said.

By Sakhile Mokoena
25 May 2017