ANC ponders greater role in parastatals

Debate is raging in the ANC over whether to step up its involvement in the management of state-owned enterprises (SOEs) amid concern that political interference risks undermining these key entities.

The role of SOEs in the economy has returned to the spotlight in recent months, following the appointment of the presidential SOE review committee and the release of the government’s economic policy document, the new growth path.

An internal ANC document leaked to the Mail & Guardian calls for the party to become involved in the review committee’s work.

But a senior government official, who also serves on the ANC’s economic transformation subcommittee, told the M&G that political interference was the key reason SOEs were struggling to stay afloat.

“In Transnet, for instance, political interference was the problem.”

Transnet executives abused their “soft budget constraints”, he said, by paying insufficient attention to how they spent money. “They mismanaged because they knew they would get a bailout.”

The official said there were conflicting views about the role of SOEs in the ANC subcommittee.

“There are different viewpoints. But SOEs in South Africa are not like the ones in China, we cannot adopt that model wholesale.”

The subcommittee is dominated by some of the ANC’s most prominent economic thinkers, including Joel Netshitenzhe and Trevor Manuel, but also contains representatives of the ANC Youth League.

Internal report
This year the ANC sent scores of its top leaders to China to study, among other things, how the Asian giant dealt with state enterprises.

An ANC internal report on the visit, leaked to the M&G, says:
“There must be introspection on the part of the ANC, especially about our understanding of political management as it relates to the SOEs.

“Are we really in charge of them or are the boards too powerful?

“What is it that prevents us from having boards that have clarity about the ANC’s mandate for particular SOEs?

“Are SOEs an instrument of struggle in transforming our economy and what is preventing them from being similar delivery mechanisms for our people to what they were for the National Party under apartheid?”

The report instructs the ANC to become involved in the work of the presidential review commission, saying that “there should be interaction between the ANC and this structure to guide the work of the commission”.

At a meeting between the Organisation for Economic Cooperation and Development and the presidential review commission this week, Public Enterprises Minister Malusi Gigaba insisted that “SOEs are not an end in themselves and do not exist just for the mere purpose that they exist, they are instruments to achieve particular goals.

“In essence, SOEs are now viewed explicitly as vehicles for socioeconomic development through which we aim to contribute to efforts to double the size of the South African economy, thereby sustainably redressing the social ills that still haunt our democracy.”

After announcing the new Transnet board this week, Gigaba highlighted his intention to forge a closer relationship between the shareholder and the company, including monthly meetings with the board chairperson and the chief executive.

The new board members will serve a three-year term, subject to annual review by the minister.

The restructuring of SOEs was mooted before the ANC’s 2007 Polokwane conference.

However, one well-placed government source told the M&G that the issue had never been “abandoned”.

The source said there was concern that there were too many SOEs — there are estimated to be more than 300 — calling for streamlining.

A number of related issues have been debated in ANC and alliance structures, including how to balance corporate interests with the strategic objectives of a developmental state.

The advantage of a corporatised entity is that it can to raise finances off-budget, the source said.

Further questions included the positioning of SOEs and whether they should be transferred to line departments, remain within the public enterprises department, or be shifted, as in some international models, to a single, high-level agency.

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Mandy Rossouw
Guest Author
Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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