President Cyril Ramaphosa’s long-term plans to have state owned entities (SOEs) housed under a holding company with no direct control by the executive could be scuppered if he fails to get a buy in from ANC MPs.
While Ramaphosa’s administration seems determined to forge ahead with the formation of the State-Owned Holding Company (HoldCo), in line with the Zondo Commission recommendations, some in his party are still lobbying against the move, arguing that the control of SOEs should rest with line departments as per a resolution adopted at the party’s national conference in 2022.
Tensions over the issue resurfaced this week after Ramaphosa issued a proclamation directing that parastatals be put under the control of line departments while the process of forming the holding company is being completed.
While it is widely believed that the move is temporary, some ANC leaders said there is no ANC resolution to move the SOEs to a holding company. The ANC welcomed Ramaphopsa’s decision, saying that it was in line with the party's conference resolution which had stated entities like Eskom, Transnet, Denel and others should be housed in the departments that make their policies, such as energy and electricity, transport, defence and others.
Ramaphosa signed a proclamation transferring Alexkor to the minister of mineral resources and energy Gwede Mantashe, Denel to the minister of defence Angie Motshekga, Eskom to the minister of electricity and energy Kgosientsho Ramokgopa, Safcol to the minister of forestry, fisheries and environment Dion George, SAA, Transnet and South African Express to the minister of transport Barbara Creecy.
The draft bill for the creation of the HoldCo is before parliament. Insiders said this week it was unclear what would be the position of the ANC caucus as the party’s national conference passed a resolution directing that SOEs fall under line departments.
A source said: “The next step should be — what should be the response of ANC MPs in relation to this bill? So you've got the ANC resolution that goes against this bill. So it's either that the ANC deployees will say that based on the caucus we're going to vote against this bill because it goes against what the ANC resolution said. Or the caucus of the ANC, [may] probably say that we're not going to implement the resolution of the ANC. Between now and the conference, it's going to be the ANC deciding whether or not we are going with this bill.”
Questions have also been raised about Ramaphosa's sudden decision to move these SOEs to their line department when at the opening of parliament and at the ANC national executive committee (NEC) he said they would be housed under the minister of planning, monitoring and evaluation Maropene Ramokgopa.
Some ANC leaders, who asked not to be named as they have no authority to speak on the matter, said that Ramaphosa's administration was continuing with the establishment of HoldCo, which would eventually house all the entities and meant the ANC was being duped into thinking its resolutions were being implemented.
The ANC conference resolution reads: “A process of reconfiguration of SOEs should place SOE’s that operate in specific sectors of the economy under the relevant government departments.” The resolution is silent on the process of establishing an SOE HoldCo that would house all these entities.
The next step should be — what should be the response of ANC MPs in relation to this bill? So you've got the ANC resolution that goes against this bill
— A source
Ramaphosa's administration believes the model should be similar to that of Tamasek in Singapore that has seen that HoldCo grow exponentially and is now valued at almost $400bn.
Ramaphosa's decision is said to have caused more confusion within the party and government and that some senior members like Ramokgopa are said to be unhappy.
“After placing these SOEs under Maropene [Ramokgopa] at the opening of parliament, a month later they have taken them. Now, three months later when the SOE Holding Company is up and running they will be taking them again. They thought Maropene would resign and this is why they communicated in this way because they wanted to emphasise the holding company and her role in establishing it so that she feels she’s still part of this thing,” said a senior party leader who also serves in the cabinet.
“We need to ask why the sudden change because this is not what the president announced at the opening of parliament, at the NEC and the NEC lekgotla. So what informed the change? Clearly there’s something happening, because why did he change his mind?”
Another government insider said: “Maropeni was unhappy because she thought as the shareholder with responsibility, she would bypass these ministers. We had to explain to her this week that she does not have operational responsibility which I think she did not understand. This can be of assistance to the National Treasury [if it] is done well,” said the insider.
“What we need is the right senior competent executives. What I know is that the president wants to take control of it himself. At holding level, it looks like the president will be seized with this in his office. He is likely going to utilise the National Treasury if needs be for the finance side.”
A senior ANC leader and government official said that despite tension over the SOEs, the HoldCo would go ahead.
“There was a bit of a tension but the holding company is going ahead. But meanwhile, while those state-owned companies were reporting temporarily to Ramokgopa in the presidency, they've [now] been shifted to the line function ministers and I'm not sure that was necessary.”
The fight over where these entities are housed seem to have also opened avenues for some of the government of national unity ministers to lay claim to them.
The Sunday Times understands that minister of agriculture John Steenhuisen has asked for Land Bank to be housed in his department while minister of public works Dean Macpherson is believed to have said that the Development Bank of Southern Africa (DBSA) should be housed under his department.
Steenhuisen, now on a state visit to China, confirmed that he would like to have oversight of Land Bank. “I would like to because of the synergy. However it is a matter that still needs to be discussed in the reconfiguration of the department,” said Steenhuisen.
This reconfiguration refers to the split of agriculture from land reform which is expected to be completed at the end of March.
Macpherson's spokesperson James de Villiers said this week regarding the DBSA: “The minister is considering all options that would enhance and drive the country's infrastructure programme and turn South Africa into a construction site.”
On the issue of Land Bank, senior ANC leaders and cabinet members say they would support it being moved to the agriculture department.
“Land Bank belongs to department of agriculture and that is the original design. because it has gone through serious financial problems, including defaulting on its debt to lenders. National Treasury had to come in to help Land Bank to get out of a default position,” said the source.
“And it's likely to be out of its default position in the next month or so, from what I hear. So if you take out the politics of who leads which department and who doesn't lead it, you land in a position that says, actually Land Bank must get out of Treasury and go back to the department of agriculture. But we have got to say under what conditions do you do that? This bank is fragile and you may not say, immediately go back to agriculture, [maybe] next year.”
