Finance Minister Nhlanhla Nene has announced a set of measures aimed at strengthening state-owned companies.

Drawing on recommendations made by the Presidential Review Committee on state-owned Companies, Nene told the National Council of Provinces (NCOP) on Tuesday that several measures will be implemented.

Some of the challenges identified by the Presidential Review Committee include governance failings and policy and mandate misalignments, among others. The measures which seek to address the challenges identified include: The Private Sector Participation (PSP) Framework, Costing the developmental mandates of SOCs and a Framework for the appointment of members to the Boards of SOCs and the Remuneration of SOC Executives

The PSP framework

The framework which was approved by 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,” said the Minister.

Currently, all SOCs are required to give effect to the implementation of the PSP framework in their respective Corporate Plans.

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).

Costing the developmental mandates of SOCs

Government has also committed to a mechanism for the costing of the developmental mandates of SOCs, with the financial implications set out more clearly in Shareholder Compacts. The proposed mechanisms include identifying existing and future developmental activities.

Framework for the appointment of members to the Boards of SOCs and the Remuneration of SOC Executives

Under the guidance of the Minister for Public Service and Administration, government has developed a framework for the appointment of members to SOC Boards and the SOC Executives.

It comprises several elements including a review of the requirements of minimum qualifications for potential candidates and a review of the methodology for processing of board appointments and their submission to Cabinet.