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The Presidency has withdrawn a bill proposing the creation of the State Asset Management SOC (Samsoc), a centralised holding company to oversee and manage strategic state-owned enterprises, after criticism that it fails to address the financial and organisational challenges at key national entities.
The department of planning, monitoring & evaluation (DPME), led by minister in the Presidency Maropene Ramokgopa, quietly withdrew the bill without putting forward reasons for the action.
President Cyril Ramaphosa’s office referred Business Times to the DPME, which declined to provide reasons for the withdrawal of a bill the presidency has championed for more than three years.
The implementation of the bill would have seen the ownership and control of key SOEs such as Eskom, Denel, the South African Post Office, Transnet, Prasa, the Land Bank, Airports Company South Africa and SAA, among others, centralised in Samsoc.
The National State Enterprises Bill was first published for public comment in September 2023, drawing comments from members of the public, businesses and lenders.
Critics of the bill, including businesses and bondholders, argued that a single holding company offered no protection against the risk of political interference in the administration of SOEs.
The bill, according to critics, also blurred the lines of accountability and decision-making between the board of Samsoc and the underlying subsidiary boards, with key decisions such as capital expenditure and allocation sitting with the holding company — functions that are normally in the domain of the subsidiary company’s board.
Another concern was that Samsoc and its subsidiaries would not be subject to the Public Finance Management Act, elevating misgivings over political interference and a lack of transparency in the procurement and financial management systems applicable to commercial SOEs — with the history of state capture still fresh in the minds of South Africans.
The business argument was also that the bill’s exclusive state shareholding stifled the potential for private sector participation or the exploration of public-private partnerships.
The last iteration of the bill was published in December 2024, with a deadline of the end of February 2025 for comments.
Old Mutual’s fixed income investor Futuregrowth, which has a large exposure to SOEs’ bonds, has been a consistent commentator on the different iterations of the bill.
“That many SOEs are financially and operationally challenged is undisputed. That some of the laws in our legislative framework need review and possible overhaul to be fit for purpose is also undisputed,” said Olga Constantatos, Futuregrowth’s head of credit.
“What we are struggling to understand is how this new piece of legislation outlined in this bill fits within the existing legislative framework and what problem it is intended to solve.
“In and of itself, we fail to understand how inserting an additional law and another statutory legal entity to govern SOEs will achieve the outcomes articulated in the bill without also simultaneously reviewing all other legislation applicable to SOEs to test (and possibly amend) for ongoing relevance, alignment with the shareholder’s objectives and consistency as between each other.”
The DPME last year requested R615m from the National Treasury, saying this would be seed capital for the holding company for the first three years, and that thereafter its operations would be funded from dividends to be received from subsidiaries of the holding company.
Eskom and Transnet, which are indispensable to South Africa, have been showing green shoots over the past few years, despite still being heavily reliant on state guarantees to stay afloat.
Eskom last month reported a profit after tax of R30.3bn for the financial year ending March 2026, the second consecutive year the group has been in the black and more than doubling the R14bn profit recorded in the previous financial year.
Minister of electricity & energy Kgosientsho Ramokgopa has laid down the law for Eskom, saying the taxpayer will no longer dish out multibillion-rand bailouts and will not accept aggressive tariff hikes under the Eskom 2.0 blueprint.
Transnet swung to a profit of R4.6bn in the year ended March — the first time it reported a profit in four years.
The likes of Prasa and Denel are yet to turn the corner, while the South African Post Office had a near-death experience. The government is again looking for a private equity partner for the troubled SAA.
Most of South Africa’s SOEs previously reported to the defunct department of public enterprises.
Business Times
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