If the SOE bill isn’t allowed to disappear into the void.
The Department of Public Enterprises (DPE) has been dissolved but the raft of troubled state-owned enterprises (SOEs) lives on and the National State Enterprises Bill cannot be allowed to drift into the information vacuum at the Ministry of the Presidency …
On Sunday evening, as President Cyril Ramaphosa finally unleashed the names of the cabinet members who are the foot soldiers of the executive wing of the government of national unity (GNU), he also executed one of the more difficult ANC resolutions from its 2022 elective conference.
In the lead-up to that conference, South Africa’s energy and logistics crises were battering the economy and none of the candidates standing for election as ANC president had a cogent plan for addressing the challenges.
The ANC – as the party that has presided over it all since 1994 – was rightly blamed for the decline in the state of public infrastructure and the specific decline of the entities grouped under the DPE, led by then-minister Pravin Gordhan.
Within this cluster of enterprises were some of the most important entities in the country – Eskom, Transnet, Denel – which have storied histories of being the driving forces of yesteryear but had been reduced to large, hollow shadows delivering on a fraction of their potential.
A hangover … and a headache
The sum of enterprises within the portfolio reflected the longstanding hangover of the political shenanigans of years before, with the accumulation of vastly different entities under a single umbrella reflecting the political headwinds of the time rather than a strategic convergence across the entities.
In the Zuma years, the DPE had become the place to house those assets that politicians wanted to pry away from ministries where the pliability of those in charge could not be guaranteed.
So when National Treasury and former South African Airways (SAA) chair Dudu Myeni had a difference of opinion about the fate of SAA, off it was shipped to the DPE portfolio.
By the time the first Ramaphosa administration took office, the DPE portfolio had become a major headache for the country.
Then the nightmare
Ramaphosa entrusted the turnaround to Gordhan, and for the ensuing five years the country watched in horror as the DPE behemoth simply never reached the state of optimal performance everyone agreed was a necessity.
The frustrations of the nation made their way into ANC conference deliberations and a resolution was taken to give up on the idea of managing such an array of different assets under one house and take everything back to where it should have been.
Of particular focus was the Eskom and Transnet shift, which represented a combination of seeking closer alignment between the policy homes of the respective entities – and the realisation that Gordhan and his DPE team simply didn’t have what it takes to manage the titanic.
Surprisingly, rather than executing on this resolution, Ramaphosa made it bureaucratically more complicated for Eskom by adding the Ministry of Electricity to the mix.
The appointment of Kgosientsho Ramokgopa to head up the ministry eventually turned out to be an inspired choice for Eskom and the country, but it did little to address the 2022 conference resolution: Eskom still had DPE oversight to contend with.
And that was in addition to every other ministry it had to account to due to the nature of its business (Minerals and Energy, and, to a lesser extent, Environmental Affairs) and the state of its balance sheet (National Treasury).
While all of that was happening, the decision to unbundle was being tentatively implemented.
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And if that wasn’t already too much, the minister of Public Enterprises was working on a grand solution for all enterprises through the State Enterprises Bill.
Intent and unintended consequences …
The intention of the bill was to finally find a comprehensive governance and management model for strategic enterprises.
In its initial iterations, however, it ended up being a decree conferring extraordinary powers on the president to be the sole shareholder of every affected entity.
Given that the champion of the bill – Gordhan – blamed much of what he was trying to fix on the shenanigans of the previous ANC president, the idea of centralising all the power in the hands of a president who occasionally loses his pen showed the type of problems inherent in crafting governance solutions for important entities while still trying to play the political patronage prioritisation approach.
As it turned out, the bill was still in flux by the time the 2024 general elections approached, and Gordhan announced his impending retirement.
Executing on the bill would have fallen to the new political heads of Public Enterprises, but as promised in 2022, the ministry has finally been dissolved. The Ministry in the Presidency now has to run with the process.
Whether such resources exist within the Presidency remains unknown and the new structure of government means those who previously opposed aspects of the bill during its development now form part of the government that has to get it across the line.
The quest continues
Whichever way the bill goes – if it goes anywhere at all – the fate of the affected entities needs to be addressed as a priority area for the new administration.
A delay in deciding where the lines of accountability are drawn within a government where accountability is already different – due to the reconstitution of accountability structures in parliament – will condemn these critical institutions to another state of limbo at a time when we can ill-afford to drift.
The problem that potentially looms lies in the rather opaque transparency inherent in the Ministry in the Presidency.
In recent years, this ministry has been tasked with coordinating or running the solution to the small business red tape crisis through the task team headed by Sipho Nkosi, the commission on state-owned enterprises, and other tasks – with very little information being shared with the public regarding the progress on these initiatives.
The SOE bill cannot afford to disappear into the same information vacuum. Far too many entities, departments, employees and stakeholders need to know what on earth happens next in the eternal quest to find the right model to run the state’s ever-declining assets.