Business and labour say having state-owned entities reporting to their line departments would assist to further prevent the inefficiencies associated with the cash-strapped companies.
The Black Business Council (BBC) and Cosatu said this as they back President Cyril Ramaphosa’s plan to have state-owned entities (SOE) reporting to specific departments instead of the public enterprises department.
BBC chief executive Kganki Matabane said the SOEs should report to their line departments to ensure proper coordination.
“Our view is informed by practicality, efficiency, corporate governance and effectiveness.”
Responding to the debate on the presidency budget vote speech, Ramaphosa reiterated the state was introducing a law to establish a state-owned holding company to oversee and coordinate key strategic SOEs.
“The legislation will assign the functions of the holding company, which will cover issues of governance, financial management, remuneration standards and similar matters.”
He stated that the Department of Planning, Monitoring and Evaluation had been charged with the responsibility to finalise the processes.
“The SOEs that were previously under the stewardship of the Department of Public Enterprises will report to their respective line departments in terms of policy and regulatory matters.
“This is in line with global best practice and is the approach taken by many countries with SOEs that successfully fulfil a social and economic development mandate,” he said.
Ramaphosa’s comments came as the state has been struggling to manage SOEs, resulting in a string of infrastructure, financial and operational failures that have cost the economy billions of rands.
The poor performing SOEs have often also tabled their annual financial reports late, making it difficult for parliament to hold them accountable.
Matabane said the operational and financial challenges can only be solved by appointing competent and capable professionals as seen in Eskom and Rand Water, among others.
“Where people fail to deliver, consequence management should be applied without fear or favour,” he said.
“Parliament portfolio committees are there to hold ministers and their departments, including entities, to account. In instances where committees fail in their duties, the president should hold ministers who fail to submit annual reports to account.”
Cosatu’s spokesperson Matthew Parks said the labour federation had pushed for SOEs to fall under their line function ministers to avoid the challenges of duplicating chains of command that we have seen before.
“So Eskom will fall under electricity, Transnet under transport, etc. An SOE shareholder council is being established but that will take time to establish but nonetheless SOEs will still report to their line function ministers.
“This is key to ensure coherent governance. A similar approach is needed in parliament so that we can assure SOEs fulfil their mandates and are held accountable. It’s critical that duplicating chains of command be avoided,” he said.
“The operational and financial challenges can only be solved by appointing competent and capable professionals as seen in Eskom and Rand Water, among others, and where people fail to deliver, consequence management should be applied without fear or favour…”