AfriForum opposes proposed National State Enterprises Bill: Warns against ‘super SOE’

13 October 2023

The civil rights organisation AfriForum today submitted written comments on the draft National State Enterprises Bill (2023) that seeks to create a holding company to replace the Department of Public Enterprises. A new government holding company will replace this department in managing state-owned enterprises (SOEs) aimed at making the state the only shareholder.

In its submission, AfriForum outlines four critical arguments against the draft bill. Firstly, AfriForum expresses serious reservations about the proposed holding company, State Asset Management SOC Ltd, and fears that it may compromise accountability and the separation of powers. In addition, AfriForum argues that the draft bill misses an opportunity for privatisation and prolongs the economic burden of failing SOEs. Thirdly, AfriForum maintains that potential benefits are being overlooked as the draft bill places centralised state decision-making above a decentralised approach and increased efficiency. Lastly, AfriForum is of the opinion that the proposed bill may increase the risk of corruption, state capture and cadre deployment in state enterprises.

According to Charné Mostert, Campaign Officer at AfriForum, the current draft bill does not serve the public interest adequately. “Legislation should be created that truly serves the best interests of the South African public. This will be essential to foster efficient state enterprises,” says Mostert. The draft bill opens the door for mismanagement, patronage and decisions motivated by political opportunism rather than the public interest.

AfriForum asserts that SOEs should cease to exist, given the history of mismanagement, corruption and inefficiency that plagues many of these entities. Privatisation of these enterprises will institute market-driven efficiency and accountability. The ANC is however unlikely to privatise these enterprises at this stage and therefore AfriForum proposes among other things the mandatory disclosure of political affiliation for state-owned enterprise board members.

“The proposed National State Enterprises Bill is expected to overhaul the way in which strategic state entities are governed by potentially increasing the political influence. As witnessed in the past, unchecked executive power in South Africa is prone to indefinite misuse. State enterprises cannot continue to be a political arena for state officials to loot,” concludes Mostert.

Issued by Charné Mostert, Campaign Officer, AfriForum, 13 October 2023