Analysis of Public Submissions Presidential SOE Review Committee

Analysis of Public Submissions Presidential SOE Review Committee

Democracy, Governance and Service DeliveryDate: 29 November 2011

Democracy, Governance and Service DeliveryDate: 29 November 2011

Date: Date:

Are SOE (s) currently viable effective, and adding to development and

transformation; and/or are they likely to in future? If not, what could be done, or what

should be enhanced?

Are SOE (s) currently viable effective, and adding to development and

transformation; and/or are they likely to in future? If not, what could be done, or what

should be enhanced?

Social science that makes a difference

Positive reasons for SOEsPositive reasons for SOEs

• Necessary to address high levels of inequality in South African society (race, gender, regional divisions).

• Meets the imperative of ‘public good’ i.e. the responsibility of the state to provide essential services e.g. Transport, telecommunications and electricity.

• Can act as a catalyst for industrialisation and economic growth e.g. Development finance institutions.

Social science that makes a difference

Challenges Challenges

• SOEs are adding to the cost of business in South Africa and are not enhancing competitiveness.

• SOEs have not contributed adequately to infrastructure development.

• SOEs have not contributed adequately to industrialisation and the manufacturing sector.

• Tension between balancing financial sustainability and developmental objectives.

• Contribution to skills development and transformation needs to be improved.

Social science that makes a difference

Challenges at a local levelChallenges at a local level

• Call for review of role of SOEs at local and provincial level.

• Empower local and provincial government to perform these functions.

• Corporatisation strategy at local level has not been effective.

• SOEs are not helping local government meet their developmental objectives.

• Inadequate funding for local development agencies.

Proposals Proposals

• A need to re-evaluate the role of SOEs in the economy?• When are they appropriate?• Reasons for SOEs in competitive markets?• Other alternatives in non-competitive markets?

• Re-evaluate administered prices.• SOEs need a private investment strategy. • Re-focus on a localisation strategy.• Develop an Africa-wide investment

strategy.

Social science that makes a difference

Date: Date:

Are the governance, ownership model, policy and legislation appropriate to enable SOEs to be effective in their

delivery? If not, how can it be improved?

Are the governance, ownership model, policy and legislation appropriate to enable SOEs to be effective in their

delivery? If not, how can it be improved?

Social science that makes a difference

Governance of SOEsGovernance of SOEs

• Need for better alignment of SOEs with government policy, legislation and funding.

• Problems in governance have affected performance of SOEs.

• Government’s role in relation to appointments to the Board, the chairperson of the Board, the CEO and Directors need to be clarified as this has caused tension and inefficiency.

Social science that makes a difference

Governance of SOEsGovernance of SOEs

• Need to align governance with international and local (King 111) best practice.

• Need to develop a code of ethics for SOEs (address issues such as conflicts of interest).

• Need to define and clarify the shareholder compact between each SOE and government.

• Need to address the question of operational independence.

Social science that makes a difference

Monitoring and Evaluation of SOEsMonitoring and Evaluation of SOEs

• Need for regular external reviews of SOEs to asses continued necessity. • Performance subject to public scrutiny

• Internal monitoring and evaluation needs to be strengthened.• Need for long term mandates for SOE

executives to monitor performance

• Inconsistent shareholder compacts results in poor evaluation frameworks

Social science that makes a difference

The Regulatory Environment The Regulatory Environment • Need for alternative regulatory

methodologies that do not add to the cost of business.• Need for a fiscal framework for finance

• The PFMA can sometimes stifle flexibility of SOEs and increase operational costs.

• The MFMA has caused significant obstacles to efficiency at the local level.

Social science that makes a difference

Date: Date:

Is the mandate and agenda for SOEs clearly articulated and is there sufficient alignment with the state’s development

and transformation plans? If not, how can it be improved?

Is the mandate and agenda for SOEs clearly articulated and is there sufficient alignment with the state’s development

and transformation plans? If not, how can it be improved?

Social science that makes a difference

The multiple and complex mandate of SOEs

The multiple and complex mandate of SOEs

• SOEs have multiple mandates- Commercial, developmental and provision of public goods, sometimes conflicting.

• The mandate and primary objectives of SOEs is not always clear.

• No clear strategy to manage or prioritise objectives.

• This inhibits private investment.

Social science that makes a difference

A need for integrated planning and clarification of mandates

A need for integrated planning and clarification of mandates

• Need for an Integrated Plan for SOEs to be developed nationally.

• Current portfolio of SOEs inherited from the past, no coherent, integrated plan.

• The specific mandate of each SOE needs to be defined in relation to a rethinking of the SOE sector as a whole.

Social science that makes a difference

Need for alignment within SOEs, between SOEs and with line

departments

Need for alignment within SOEs, between SOEs and with line

departments• Multiple lines of accountability to various

departments.

• No clear methodology as to how SOEs are placed in lead departments.

• Department of Public Enterprise was established by the previous government and should be dissolved to allow for direct accountability to lead departments.

Social science that makes a difference

SOEs role in developmentSOEs role in development

• SOEs make an important contribution to development.

• Contribution to technical skills training but need to improve artisan training.

• Need to improve local procurement policies to encourage local small business.

Social science that makes a difference