One of the first government departments that will cease to exist is the department of public enterprises as the state’s reconfiguration process gets underway.
Image: GCIS.
This is what President Cyril Ramaphosa told parliamentarians during his first question and answer session in the National Assembly on Thursday where the downsizing of government departments took center stage.
“The ministry of public enterprises will cease to exist because the entities overseen by the minister of public enterprises will revert back to their departments.
“ The coordinating structure, which is your state-owned enterprise (SOE) holding company which is going to enhance proper coordination, give us all line of sight of what’s happening in our state-owned enterprises, financial discipline that should be there and benefitting from economies of scale when it comes to procurement and governance systems, will be housed in a state-owned enterprise holding company,” said Ramaphosa.
The president was responding to a question put to him by the IFP’s Mkhuleko Hlengwa, who asked the president to tell the nation whether he intended to dissolve the department of public enterprises and house state-owned enterprises in their respective line function departments.
Ramaphosa said: “That ministry is in the process of putting together the legislation and the way through which this company is going to function, so that is the way we are going to function.”
Beyond that, Ramaphosa said government was going to also look at the merger of some departments so there is a more effective executive with fewer ministries.
He said the country has more than 100 SOEs which play a crucial role in the provision of public goods and infrastructure to enable economic growth.
In his state of the nation address last month, he announced government was taking “far-reaching” reconfiguration of SOEs.
“This work, which will review the role of all departments, including the department of public enterprises, will inform the configuration of government going into the next administration.
“This process of reconfiguration takes the overall approach that SOEs that operate in specific sectors of the economy should be placed under the relevant government departments.”
This is the case for most SOEs, he said, with the only exception being the seven state-owned companies that fall under the department of public enterprises.
“The reconfiguration process is supported by the work of the Presidential SOE Council, which, among other things, has made proposals to strengthen the framework governing SOEs and determine an appropriate shareholder ownership model.”
He said among the recommendations of the Presidential SOE Council is the adoption of a centralised shareholder model for the management of SOEs and that a state-owned holding company be established to house strategic state-owned companies (SOCs) and exercise coordinated shareholder oversight.
“This will delineate the functions of policymaking and regulation from the shareholding and operations of those SOCs. Policy-making and regulation will reside in the relevant departments.”
He said a holding company will instill effective governance and enhance the efficiency of SOCs to achieve government’s developmental objectives, ensure increased transparency and accountability and promote the commercial sustainability of SOCs.
“A state-owned holding company would enable streamlined governance processes, transparent financial systems, economies of scale in procurement, shared transactional services and adequate funding to SOEs to fulfil their respective mandates,” he said.
The SOE council is in the midst of an in-depth exercise to establish the strategic and developmental role of each SOE, their financial position and operational capabilities, said Ramaphosa.
“The council will make recommendations on which SOCs could be placed in the proposed holding company.”
In a follow up question Hlengwa put it to Ramaphosa that he was not committed to his own commitments in so far as the reconfiguration of government was concerned.
“In 2018 you said, as indicated in the state of the nation address, we have begun the review of the reconfiguration, size and number of national ministries and departments.
“In 2019 you said to promote greater coherence, better coordination and improve deficiency we have combined a number of portfolios. In 2023, Mr President, you said ‘the presidential SOE which I appointed in 2020 has recommended government adopt a centralised shareholder model for its key commercial state owned companies’.”
