Pictured: Public Enterprises Minister Malusi Gigaba Public Enterprises Minister Malusi Gigaba

Government’s strategic motivation in owning state-owned companies is still not recognised in policy, says Public Enterprises Minister Malusi Gigaba.

“The challenge that we face is that the government’s strategic motivations in owning SOCs (state-owned companies) are still not explicitly recognised in policy.

“Consequently, the executive authority’s more detailed strategic mandate and intent statements to SOCs do not have formal policy status,” states Gigaba.

Speaking at the Chairpersons’ Forum, which is a platform where the minister meets the Board chairpersons of SOCs under his oversight management, Gigaba said that in a number of cases sector policies are not aligned with the strategic mandates provided to SOCs.

“In other words, it does not help if the policy departments are still fundamentally prioritising private sector investment at the expense of enabling the achievement of the core strategic mandates of SOCs,” he said at the forum.

Gigaba said that the Presidential Review Committee (PRC) on State-Owned Enterprises was established to provide greater policy certainty regarding the role and governance of SOCs and to provide for the reconfiguration of their governance architecture.

In 2011, the PRC called on the public, government departments and organised business among others to make submissions that will contribute to the process of reviewing SOCs.

President Jacob Zuma established the PRC in response to the acknowledgement that there is a need to strengthen the role of SOEs to ensure that they respond to a clearly defined public mandate and support the developmental state aspirations of government. The report was presented to Cabinet lekgotla in September 2012 where it was welcomed.

“Having adopted the PRC Report, Cabinet is soon to outline the process to implement the Report’s recommendations. We need to make sure that we optimise this process and put in place a rigorous mechanism to align policy in general, but sector policy in particular, with the strategic mandates that are given to SOCs,” said Gigaba.

The report covered several areas, including the role of SOCs in a developmental state, governance and ownership.

“Until this is achieved, we will effectively be swimming against the current. Over the last few years the department has put considerable effort into constructing a shareholder management model that aims to enable us to find the right balance between ensuring the financial sustainability of the SOCs whilst optimising their developmental impact,” explained Gigaba.

Additionally SOCs needed to play a more central role in realising the objectives of the National Development Plan (NDP). The plan identifies six pillars that underpin efforts to eliminate poverty and reduce inequality that include raising economic growth, promoting exports and making the economy more labour absorbing.

“We need to interrogate how the SOCs can play a more central and effective role in realising the objectives of the plan,” said Gigaba.