FINANCE MINISTER ANNOUNCES MEASURES TO STRENGTHEN SOUTH AFRICAN STATE-OWNED COMPANIES

CAPE TOWN– South African Finance Minister Nhlanhla Nene has announced a set of measures aimed at strengthening State-owned companies (SOCs).

Addressing the National Council of Provinces (NCOP), the upper chamber of Parliament, here Tuesday, he said that given the dire situation which some of these SOCs are in, capable and morally upright men and women are needed to stabilise them.

Drawing on recommendations made by the Presidential Review Committee on SOCs, Nene told the NCOP that several measures would be implemented to address challenges faced by the entities. Among the challenges identified by the Committee are governance failings and policy and mandate mis-alignments.

The measures which seek to address the challenges identified are:The Private Sector Participation (PSP) Framework; costing the developmental mandates of SOCs; and the framework for the appointment of members to Boards of SOCs and remuneration of executives of SOCs.

The PSP framework, which was approved by Government in 2016, provides for alternative financing strategies to enable infrastructure investment and highlights considerations for SOCs to partner with private sector companies to enable a faster, more efficient delivery of goods, services and economic infrastructure to support South Africa’s higher economic growth aspirations and economic transformation goals.

The PSP framework is therefore aimed at accelerating the delivery of infrastructure projects that are key for enabling economic growth through leveraged financing from the private sector, said Nene, who added that it proposes key principles for determining where PSP projects should be undertaken.

Thes principles are the possible PSP structures which could be employed depending on the nature of the infrastructure project; and a governance framework for government to oversee the implementation of PSPs.

The proposed PSP projects must be a by-product of the filtering process based on sector performance and market structure analysis with a key focus on economic development. Key principles of the framework include consideration that PSP project are feasible and demonstrate that they will yield socio-economic benefits for the country.

Currently, all SOCs are required to give effect to the implementation of the PSP framework in their respective Corporate Plans.

The government is currently working towards several objectives, including higher levels of investment in economic infrastructure in both the public and the private sectors for South Africa to achieve its economic growth rate aspiration of 5.0 per cent as outlined in the National Development Plan (NDP).

Regarding the appointment of members to the Boards of SOCs and the remuneration of SOC executives, Nene said that under the guidance of the Minister for Public Service and Administration, the government had developed a framework for the appointment of members to SOC Boards and the SOC executives.

It included a review of the requirements of minimum qualifications for potential candidates and a review of the methodology for processing of board appointments and their submission to Cabinet.

Source: NAM NEWS NETWORK