CAPE TOWN, South African Deputy President Cyril Ramaphosa has told Parliament that the ongoing implementation of State-Owned Enterprises (SOE) reform is one of the measures being put in place by the government to improve confidence in SOEs.

In his replies to questions raised in the National Assembly (lower house of Parliament) here Wednesday, he said SOE reform was also aimed at stabilising their finances, governance and operations, among other objectives. He told Parliamen that as part of the Presidential Review Committee recommendations, an Inter-Ministerial Committee (IMC) chaired by him had developed several measures to advance the reform of SOEs.

In July 2017, the Minister of Finance provided time frames for the implementation of 14 critical measures to rebuild investor confidence, including steps to stabilise and reform SOEs. The Cabinet has also considered guidelines for the remuneration of SOE directors and executives and a guide for the appointment of SOE boards and executive officers, Ramaphosa said.

These, he added, are intended to ensure consistency, transparency and probity in all matters relating to appointments and remuneration.

The Cabinet had also considered a private sector participation framework, which provides guidance on how to involve the private sector in new public infrastructure programmes, Ramaphosa said.

He added that the IMC was also co-ordinating work on the development of a new shareholder policy for government which would improve co-ordination, oversight and the effective allocation of resources.

The first phase of the reform is focusing on the major commercial SOEs that are the backbone for our infrastructure development,” the deputy president said. The IMC has approved a structure that categorises SOEs into nine sectors to allow for the optimisation of State intervention in each sector.

He said the prioritised sectors had been identified based on their potential to contribute to re-industrialisation and create jobs. The work being done in the short to medium term is consolidation, re-alignment and possible merger of certain SOEs, concentrating on the airlines, state mining assets and telecommunications.

The development of the optimal structure for the three state-owned carriers –South African Airways (SAA), SA Express and Mango — has been concluded, and the Ministers of Finance and Public Enterprises will present the proposed recommendations to the IMC and Cabinet soon.

There are also proposals for financial support to some SOEs. In light of what is envisaged in the draft Shareholder Policy, providing financial support to SOEs must be matched against the entity’s potential to remain sustainable and wean itself off government support, Ramaphosa said.

He said the IMC was considering various alternative and innovative instruments to fund SOEs, including leveraging on the private sector participation framework on which National Treasury is engaging with various departments and SOEs.

The criteria for support is being developed and, once finalised, will be taken through the necessary approval processes and presentation to the Cabinet.

He said SOEs had significant potential to drive higher levels of economic growth, job creation and development. Through the work being done by the IMC on SOE reform, we are confident that we will soon be able to more effectively realise that potential.