South Africa takes measures to strengthen state-owned companies

South Africa’s Finance Minister Nhlanhla Nene has announced a set of measures aimed at strengthening State-owned companies (SOCs).

The measures include the Private Sector Participation (PSP) Framework; Costing the developmental mandates of SOCs;
The framework for the appointment of members to Boards of SOCs and remuneration of Executives of SOCs.

According to Nene, who addressed South Africa’s National Council of Provinces (NCOP) on Tuesday, given the dire situation in which some of these state-owned companies are in, capable and morally upright men and women are needed to stabilise them.

He drew on recommendations made by the Presidential Review Committee on State-owned companies, assuring the NCOP that several measures will be implemented.

These measures which seek to address challenges faced by the entities. Among the challenges identified by the Presidential Review Committee include governance failings and policy and mandate misalignments, among others.

The framework which was approved by the government in 2016 provides for alternative financing strategies to enable infrastructure investment and highlights considerations for SOCs to partner with private sector companies to enable a faster, more efficient delivery of goods, services and economic infrastructure to support South Africa’s higher economic growth aspirations and economic transformation goals.

“The PSP framework is therefore aimed at accelerating the delivery of infrastructure projects that are key for enabling economic growth through leveraged financing from the private sector,” Nene said.

The framework proposes the key principles for determining where PSP projects should be undertaken.

To give effect to this framework, government is currently working towards several objectives including higher levels of investment in economic infrastructure in both the public and the private sectors for South Africa to achieve its economic growth rate aspiration of 5% as outlined in the National Development Plan (NDP).

South Africa’s state-owned companies have struggled in recent times. Public Enterprises Minister Pravin Gordhan recently announced that the government is making moves to merge state-owned airlines South African Express (SA Express) with South African Airways (SAA).