Maropene Ramokgopa, the minister responsible for managing the transition of state-owned companies (SOEs) to a shareholding company, has come out against the sale of equity stakes in these entities — including SAA — to private players.
Ramokgopa, minister of planning, monitoring & evaluation, also dismissed suggestions that SOEs would now fall under their line departments after the scrapping of the department of public enterprises with the formation of the government of national unity.
This position appears to fly in the face of resolutions taken at ANC conferences in 2017 and 2022, which stated that all SOEs must be transferred to their policy departments.
Ramokgopa told Business Times the government should rather bring in private operators to help manage SOEs while they remain 100% state owned.
This a stark departure from the view of Pravin Gordhan, who pushed for the sale of an equity stake in SAA in a deal that collapsed just weeks before the end of his tenure as minister of public enterprises.
Gordhan and his now defunct department had concluded a deal to sell 51% of SAA to the Takatso Consortium, but the deal was struck down after facing major pushback.
“I’m not really a fan of selling equity,” said Ramokgopa, “but I would be a fan of partnership where the state owns 100%; in terms of operations we could then find an operating partner but not sell in any way. But that is me alone, I do not know about other people ...
We need to look at operating partners or management partners, whatever you’d want to call them, instead of the selling of equity
“So in my view, and I’ve seen it happen in other countries, like in India, they would always just have an operating partner to deal with those issues. Whenever you talk about private sector participation, it’s more on the operating partner, than selling of equity.”
Speaking to Business Times at the opening of parliament, Ramokgopa said she would have a sit-down with President Cyril Ramaphosa to hear what his thinking was on SOEs.
“But I’m saying from my side, I really do believe that we need to look at operating partners or management partners, whatever you’d want to call them, instead of the selling of equity. Whether you’d have a 10-year contract or a 30-year contract like in other countries.”
She cited the example of Angola’s TAAG airline, which signed a 10-year non-equity management agreement with Emirates in 2014. Emirates cancelled it two years later.
Ramokgopa acknowledged capital had to be raised to return SAA to its former glory. “At the moment [it is] operating at a very minimal level. It used to be the biggest team in the country. We would like to see it being the biggest in the continent. There is that cry, and that interest to say that we want to see it coming back.”
In announcing his new cabinet, Ramaphosa gave Ramokgopa the role of overseeing all SOEs while establishing a holding company that will house the 13 most strategic, including Eskom, Transnet, the South African National Roads Agency and the Airports Company of South Africa.
Speaking at the opening of parliament, the president said the transition of SOEs to a centralised ownership model via a holding company would go hand-in-hand with the creation of a sovereign wealth fund.
Ramokgopa, who also serves as the second deputy secretary-general of the ANC, said she will forge ahead with the establishment of the SOE holding company and will push for the passing of the National State Enterprises Bill (NSEB) currently before parliament.
The cabinet approved the bill last year, kick-starting the process that made the department of public enterprises redundant. The bill, based on recommendations from the presidential review committee headed by Riah Phiyega and the Presidential SOE Council, emerged from a range of efforts by the government to improve the viability of SOEs.
Before its demise the department of public enterprises, as the secretariat for the Presidential SOE Council, sent delegations to China, Singapore, Malaysia and France to learn from their successful examples of dealing with SOEs.
Although it is not yet known what shape the South African holding company will take, it is understood the government was impressed with Singapore’s Temasek Holdings, “which serves as a central ownership model and a monitoring agency for SOEs”.
Ramokgopa’s opposition to strategic SOEs falling under their line departments could cause ructions in the ANC, as some senior leaders believed the dissolution of Gordhan’s ministry meant this was a fait accompli.
She said placing strategic SOEs in a holding company was meant to stabilise them, so they became profitable and operated off their balance sheets.
South Africa’s SOEs have been mismanaged for decades and have had to rely on the fiscus for bailouts. However, finance minister Enoch Godongwana has repeatedly stressed that the government’s patience is at an end and they need to pay their own way.
Among the National Treasury’s interventions to stabilise SOEs was a debt relief programme for Eskom whereby the government agreed to take over R254bn of Eskom’s R423bn debt over three years. The entity was at risk of defaulting on about R350bn of this debt.
Weak performance at Transnet Freight Rail and the ports it operates has hurt critical sectors including mining, agriculture and energy. The new leadership at Transnet, however, is implementing proposals in the Freight Logistics Roadmap to expedite the entrance of private operators for both rail and ports.
Philippines-based International Container Terminal Services has been granted a 25-year concession to operate Durban container terminal pier 2. The award is being challenged in the Durban high court by APM Terminals — the operating company of global shipping giant Maersk.
The South African Transport & Allied Workers Union, an affiliate of ANC alliance partner Cosatu, has criticised the awarding of the concession, calling it “privatisation by stealth”.
Ramokgopa said the creation of an SOE holding company would not translate into privatisation as the government would remain the sole shareholder of these entities. “It’s not privatisation because if you read the NSEB, it says that the state will be the sole owner, the sole shareholder, of this holding company.”
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