DA rejects Ramaphosa’s plan to create a new SOE to manage bankrupt SOEs

11 February 2022

Note to Editors: Please find an attached soundbite by Ghaleb Cachalia MP 

The DA rejects the announcement made by President Cyril Ramaphosa in his State of the Nation Address in which he revealed that preparatory work has begun for the establishment of a state-owned holding company to house all commercial SOEs.

This is a regressive move which does nothing to solve the current systematic challenges affecting these entities, but keeps them beholden to the state for endless bailouts.

Instead of creating a new SOE to manage bankrupt SOEs, Ramaphosa missed a leadership moment to open up SOEs for private sector investment and innovation.

Just recently, we learned that South Africa Post Office, Land Bank, Denel, SAA and SA Express and Armscor failed to meet the September 2021 deadline to submit their 2020/21 annual reports in Parliament. This is just the tip of the iceberg for a sector that is infested with governance and operational inefficiencies.

The least that the government should be doing now is to be preparing SOEs for the unavoidable eventuality of private participation. The DA has been advocating for such an approach for years, with our latest proposition being the Public Finance Management Amendment Bill, 2020.

The bill aims to “provide for additional measures in instances where the executive authority fails to table an annual report and financial statements of a department or a public entity, and the audit report on those statements, in the National Assembly or the relevant legislature”. The DA calls on all parties represented in Parliament to support this Bill.

Thinking that such deeply entrenched shortcomings can be solved through a new holding SOE company is not only naïve but reckless. 

SOEs were at the centre of the state capture project, driven mainly by the state’s iron fist control over their operations. The proposed new holding company will only make it easier for the state to interfere more in areas of procurement, financial management and on who gets appointed to what post. In short, it will be a perfect platform to re-institute state capture and further entrench cadre deployment in the public service.

The DA will reject any legislation brought to Parliament, by the President or the Department of Public Enterprises that seeks to establish this proposed state-owned holding company for SOEs.

Issued by Ghaleb Cachalia, DA Shadow Minister of Public Enterprises, 11 February 2022