Consolidate state entities: govt report
The presidential review committee on state-owned entities recommends that government reduce the number of SOEs, currently at approximately 715, and streamline where appropriate.
“This will mean better synergy and efficiency and it will reduce the demand on monitoring resources,” the committee concluded.
The report’s findings were released on Tuesday (28 May) at a media briefing in Parliament, and presented by performance monitoring and evaluation minister Collins Chabane.
“The primary mandate of the PRC was to review SOEs and to provide recommendations and reforms on these entities across all spheres of Government.
“This goal was in order to achieve a balance between national developmental and transformation objectives, improved governance, improved performance, and improved service delivery as well as to achieve sustainable viability of SOEs in alignment with the developmental state aspirations,” Chabane said.
The PRC observed that there were 715 entities serving various commercial and non-commercial objectives at different spheres of Government.
The report backs up comments made by Public Enterprises minister, Malusi Gigaba at the annual results presentation of state owned broadband infrastructure operator, Broadband Infraco, in October last year.
The minister said he had spoken with government regarding an alignment with state owned signal distributor, Sentech, and Telkom.
Government has a 39.7% direct stake in Telkom, with an additional 10.6% indirectly owned by state entity, the Public Investment Corporation.
“There is no finality as to what form that alignment would take,” Gigaba said at the time, adding that government was committed to structuring that alignment.
Chabane said on Tuesday that the report recommends major reforms to strengthen SOEs and address the issue of non-financially viable commercial entities.
The Review articulates that the State should:
- Clearly define and communicate a consistent strategy for SOEs.
- Ensure that governance policies and practices are in place and that effective contact between regulators, agencies, Government and SOEs are maintained.
- Define the purpose of SOEs. Standardised monitoring and evaluation criteria modelled on best practice should be adopted to make it more effective.
- Enable high operational performance of SOEs so that they are able to meet economic and developmental objectives in a cost effective manner.
- The Government should develop a consolidated funding model for commercial SOEs and Developmental Finance institutions (DFIs).
Additional recommendations included SOEs to be required to develop transformation plans; that government should develop and adopt a policy shift towards a greater mix of debt finance and equity finance; and that private sector participation in partnering with SOEs to deliver on the provision of both economic and social infrastructure should be encouraged and expanded.
“Government now aims to re-orient the SOEs towards the twin goals of attaining the country’s socio-economic developmental goals and maximising operational efficiency and financial sustainability,” Chabane said.
He stressed that implementation of the PRC recommendations should be viewed as a reform process or programme, not a once off event.
The PRC proposed a phased implementation approach of the PRC recommendations namely: short-term (up to two years), medium-term (five year period) and long-term (full implementation of all reforms).
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