The long-awaited review of state-owned entities, released on Tuesday, moots the possibility of collapsing non-viable parastatals but skirts the vexed issue of privatisation.<\/p>\n
The report gives government a range of options, including absorbing ailing state-owned enterprises into line-function departments, turning them into public-private entities, or “completely disposing of them as state entities”.<\/p>\n
However, at a press briefing, the deputy chairman of the presidential review commission, Glen Mashini, said privatisation was deliberately not mentioned, though the report acknowledged a universal truth that some services were better provided by the private sector.<\/p>\n
“We did steer away from that divisive terminology, in terms of whether you privatise or you retain.”<\/p>\n
He said the committee agreed that in instances where market conditions had rendered a particular entity obsolete, the state “can diversify away from it”.<\/p>\n
The review, which was three years in the making, spells out the need for an “over-arching, long-term strategy” to enhance the running and the economic and social impact of SOEs.<\/p>\n
It makes 31 recommendations, many aimed at standardising the way in which parastatals are managed — down to the appointment and remuneration of their executives.<\/p>\n
But in doing so, it says, government must define different categories of SOEs, with some required to return a profit to the state, and others like the SABC, primarily designed to provide a service.<\/p>\n
Monitoring and Evaluation Minister Collins Chabane said the state should also develop clear guidelines on its financial support to parastatals, instead of giving bail-outs on an ad hoc basis.<\/p>\n
“There are funding challenges in most of the institutions and, apart from a bail-out here and there, there is no common way in which we try to make these things sustainable.”<\/p>\n
The review found initial estimates that South Africa has 300 state entities were way off the mark — in fact, there are 715.<\/p>\n
Mashini said the conclusion was that “by and large there was a sense that there is value for money; however, there is room for improvement”.<\/p>\n
Chabane made clear that reforming state policy on SOEs would be a slow process, with an inter-ministerial committee making periodic recommendations to Cabinet in coming years.<\/p>\n
“It is not something that can be done overnight,” he said.<\/p>\n
The review committee called for a strategy to make SOEs more efficient to be drafted within two years, and for new SOE legislation to be promulgated by 2020.<\/p>\n
The new law should establish a central remuneration authority, and two central SOE authorities. One would govern commercial parastatals and the other, development finance institutions.<\/p>\n
The review body was established by President Jacob Zuma in 2010 and its report was adopted by Cabinet last month.<\/p>\n
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