Cape Town – Government could have departments absorb some state-owned entities (SOEs) whose functions can be more cost-effectively carried out by departments, but no decision had been taken on this yet, the Minister of Performance Monitoring and Evaluation, Collins Chabane, said today.
The Presidential Review Committee’s report on state-owned entities, which was released today by Chabane, recommends that the government rationalise its holdings in SOEs by focusing on those entities that provide public goods and those deemed to serve national interests, that cover national security and serve priority sectors.
The review committee was set up in May 2010 to relook at the role that state-owned entities can play in the development state, and was chaired by the now national police commissioner, Riah Phiyega.
Chabane said it was possible that functions of some SOEs could be performed by departments themselves, particularly where these functions are not commercial.
The state, said the report, should also exit from those sectors where market failures no longer exist or where services can be adequately provided by the private sector, and should divest either fully or partially from underperforming SOEs that are competing against private operators.
However, the report does not recommend which particular SOEs should be divested from, done away with, have their functions devolved into departments or be sold off.
Chabane said any decision over whether or not to sell off some SOEs, divest partially from some or absorb their functions into departments would have to be taken later, after an SOE inter-ministerial commission recommends steps that should be taken to the Cabinet.
The inter-ministerial commission was approved by the Cabinet to guide the implementation of the report’s recommendations.
The report outlines a phased implementation process, with short-term recommendations such as the drafting of a White Paper on SOEs to be put in place between now and 2015.
A White Paper on SOEs, said the report, should consider the rationalisation and consolidation of SOEs and the identification of the strategic sectors SOEs should operate in.
The review committee’s deputy chairperson, Glen Mashini, said too many SOEs were undertaking overlapping work or work that could be carried out by departments themselves.
However, he said the committee found that most of the 715 state-owned entities the committee had identified were functioning reasonably well, with a few exceptions.
“So by and large, there was a sense that there is value for money…” said Mashini.
Other recommendations
The report – which benchmarked South Africa’s SOEs with a number of countries, including those of Germany, France, Malaysia and China – also recommends that a central remuneration authority be set up to rationalise the salaries of those working in the different SOEs
Another recommendation is that the government develop a consolidated funding model for commercial SOEs and development finance institutions.
The report found that developmental finance institutions in other successful developing countries commanded a far greater share of capital in their respective economies.
SOEs, said the report, should also be more involved in skills development, in procuring more from black-owned and empowered suppliers, and developing such suppliers through enterprise development.
It also calls for the revision of the procurement thresholds, from the current 20 or 10 points assigned to preferential procurement, to 30 points, and also proposes set-asides for small businesses, youth, women and rural participants. – SAnews.gov.za
