Public Enterprises Minister Pravin Gordhan proposed that state-owned entities transfer to a government-controlled holding firm. (Bongiwe Gumede/Gallo Images)
The ANC is likely to reject a proposal by Public Enterprises Minister Pravin Gordhan which would see state owned entities (SOEs) operating under one holding company.
In an interview with the Mail & Guardian this week, the head of the party’s economic transformation subcommittee Mmamoloko Kubayi said the ANC-led government had no option but to implement its policy resolutions which called for SOEs to be moved to their line ministries.
The ANC’s resolution potentially flies in the face of a new reform, approved by cabinet last week, which would instead see SOEs transferred to a single holding company, the State Asset Management SOC Limited.
President Cyril Ramaphosa has in the past promised to reconfigure his cabinet and dissolve Gordhan’s department which is charged with overseeing most SOEs. The decision by the ANC to move SOEs to their line ministries was made during its 2022 December conference.
This resolution would see power utility Eskom being moved to the ministry of mineral resources and energy, currently headed by Gwede Mantashe, with South African Airways being moved to the department of transport.
“The resolutions remain in terms of the mandate from the last conference in terms of ensuring those entities that have been agreed to go into their line areas,” Kubayi said.
She added that part of the challenge was balancing the party’s commitment to enforcing the report by the Zondo commission on state capture, with implementing the ANC’s own resolutions.
“So it’s always finding the balance and getting our deployees to understand that conference resolutions remain and stand for us to be able to implement. It’s not an option for us not to implement because it’s the decision of the highest decision-making body,” Kubayi said.
Gordhan’s proposal, contained in the National State Enterprises Bill, will mark a significant departure from the ANC resolution.
Under the draft law, the president will be the sole representative of the holding company, but may transfer any power or function referred to in the legislation to another member of the cabinet. The holding company will act through its board, appointed by the president.
According to acting director general of the department of public enterprises Jacky Molisane, only profitable state-owned entities will be transferred to the holding company. Others will have to be restructured or consolidated.
Kubayi said the ANC would have to monitor the public engagement on the proposal by Gordhan before making a hardline decision on whether the party would reject it.
Mmamoloko Kubayi, the ANC’s economic transformation head. (Jeffrey Abrahams/Gallo Images)
“For us as a subcommittee we understand that from a mandate point of view [with regards] to the conference resolutions, we have no power to change the conference resolution but to oversee its implementation to the fullest.”
Speaking to the M&G earlier this week, Molisane underlined the importance of getting the reform passed swiftly, while noting that there was bound to be pushback.
“It should be done sooner, rather than later and it is important that we rally people around this. Because it has been how many years that we have been talking about this and there has been no traction,” Molisane said.
“And now we are on the verge of this … In the event that this does not happen, what is the downside? The downside is that we are going to be in a worse position than we are. Decisions need to be made.”
William Gumede, an associate professor in the Wits school of governance, noted that a key weakness of the ANC government is the slow pace at which it pushes through reforms.
“Up until now there has been no political will to do it … SOEs are a very big site of capture, so there has also been resistance to any reforms — resistance from within state-owned entities, but also political resistance from within the ANC,” Gumede said.
Kubayi conceded that the governing party had areas of concern in its reform agenda saying that where the government had taken long to implement reforms, there had been a negative impact.
The difficulty was also that the state had been overwhelmed in terms of capacity to rebuild institutions, she added.
“What we have seen with this administration as it comes to an end, it was more about rebuilding institutions and rebuilding credibility of the state. I believe we have been able to build that credibility,” Kubayi said, adding that the government had also been able to restore skills within SOEs.
The ANC leader — who is also part of Ramaphosa’s cabinet — rebuffed the argument that SOEs should be run by independent bodies, saying that the ruling party was resolved that the government should remain the shareholder.
“SOEs are utilised as a tool to transform society. We are meant to utilise them as a catalytic tool to be able to oversee our implementation and our developmental agenda therefore they cant be immune from the state,” Kubayi said.
“The notion that because they are going to be immune from the state they will never have corruption, there is no reality from study that says the private sector cannot be corrupt.”
She said the current administration would be making unpopular decisions to stabilise the government and professionalise its economic cluster. The government’s challenge was that the economic cluster was run by people with no economic background, she said.
“Focus is also to reclaim the spaces especially in critical areas, your logistic side, your economic growth but more intensified visibility in service delivery… As we reach this 30 year review, this 30 year mark, it’s those things that we have started to do.
“(In) human settlement we have built almost 3.5 million houses but the reality is that because those houses have to be maintained the issue we start to have is the ratification of those houses. It’s that balance we have got to have, to be able to respond to society.”