Big changes for state-owned companies in South Africa

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The dissolution of the Department of Public Enterprises shows that the Government of National Unity is moving ahead with controversial changes to state-run companies in South Africa.

During the announcement of South Africa’s seventh administration’s national executive on 30 June, President Cyril Ramaphosa announced a big shift for the country’s state-owned enterprises , dissolving the Ministry of Public Enterprises and moving the portfolio into the presidency.

A prevalent example is that the South African government has invested R282.5 billion in various SOEs as “capital investments” since 2019 but has received just R1 million back in dividends.Gordhan previously said that this proposed model will “separate the state’s ownership functions from its policy and regulatory functions, minimise the scope for political interference, introduce greater professionalism, and manage state assets in a way that protects shareholder value.

The Committee must include three national executive members appointed by the President, one representative each from organised labour and business, sector-specific experts chosen by the President, and a representative from the holding company selected by its Board. “We recognise that multiple strategies have been devised by the various administrations for SOEs, but there has been a crippling lack of execution or implementation of these. Consequently, we are concerned that this objective may turn into yet another example of failed execution,” said Constantatos.The SAMSOC will hold all the equity of strategic companies engaged in trading. Capital is raised by selling stakes to equity partners or listing the firms on the stock exchange.

“Possible political interference remains an area we do not believe has been fully mitigated, acknowledging that this risk has been reduced with the revised version.”in a bulletin that there are requests for further additions to the bill, including:

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