Why a coalition could be good for state-owned companies in South Africa

 ·5 Jun 2024

The new era of possible coalition politics could actually be good for South Africa’s state-owned enterprises (SOEs), because it could usher in a culture that prioritises consequence management.

This is seen to be crucial to maintain and build on progress made in public-private partnerships (PPP), however this all ultimately depends on the final coalition partners.

This is the view presented by Yugen Pillay, the Head of Public Sector Assurance at accounting firm group BDO South Africa.

“The fundamental root cause of [SOEs being brought to their knees] is mismanagement and a lack of accountability of those entities,” Pillay told Newzroom Afrika.

Pillay noted that in the past, policies and decisions crucial to SOEs were able to easily pass through along party lines, without much oversight.

This, along a prevalent tendency to overlook wrongdoing or harmful policy decisions if they originated from within the party, were among some of the key issues hurting SOEs as a result of one-party dominance.

Having a diverse array of organisations with their names and reputations tied to these SOEs could bring bring in far more effective consequence management, argues Pillay.

Additionally, SOE policies will need to be decided by more of ‘give-and-take,’ to make its way through.

“When we’ve got a coalition government in place, there’s [definitely] going to be more oversight,” and hopefully less government interference in everyday SOE operations, said Pillay.

But… this improvement depends on the coalition partners

Having said this, Pillay said that much of this is dependent on who the ultimate coalition partner/s is/are.

Among political parties, there are fundamental ideological differences in how they view SOEs should be run.

Policy positions from key coalition discussion players range from completely reversing all PPPs to completely nationalise SOEs, to promoting SOE growth through public-private partnerships.

Pillay hopes that the former does not happen and that the private sector is not left out in the cold.

He said that PPPs minimise the detrimental interference of appointees who are unable to efficiently and ethically handle operational issues within SOEs, which ultimately hollows (and hollowed) them out.

He argues that if these pro-nationalisation parties are indeed the preferred partners, they should compromise with this given some of the successes PPPs have had, and rather take a more active role in oversight.

Read: South Africa’s ‘watershed moment’ – and a very important 2 weeks

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