Minister of Public Enterprises Lynne Brown told the Black Management Forum (BMF) on Tuesday that there will be no privatisation of State-owned companies (SOCs) on her watch.
Speaking at the BMF annual conference, Brown ruled out privatisation: “not for basic services anyway,” saying to applause from the audience that a poor woman in Kuruman should be able to afford electricity.
Brown said government under the leadership of Deputy President Cyril Ramaphosa is working on a new overall management model for SOCs and a concept paper will be ready by the end of the year.
She said decisions have to be taken about which of the 700-odd SOCs remain [in existence], which don’t and where they reside in government.
Government is further looking at a new model of public participation in the SOCs to accommodate the BMF or any other organisation to bring issues and concerns relating to these entities forward. The aim is to create an institutional structure that will ensure citizens trust what the State is doing with regard to SOCs, Brown said.
She criticised the predominant narrative about SOCs in the media, saying when black leaders are appointed, it is portrayed as cadre deployment. “If a black leader is employed by any SOC, he must be there because he slept with the minister or something,” but when a white person is appointed, no similar questions are being asked.
In this regard she contrasted criticism of the recent appointments by Eskom of Dr Ben Ngubane, Brian Molefe as CEO and Anoj Singh as CFO, with the earlier appointment of then DA Shadow Minister of Finance Tim Harris as CEO of Wesgro, which she said went unchallenged. (Wesgro is the Destination Marketing, Investment and Trade Promotion Agency of the DA-controlled Western Cape).
“The narrative of that leadership paradox is not informed by you and me,” she said. It is informed “elsewhere”. She said it must therefore be clear what exactly a call for the appointment of expertise to SOCs really means.
Brown acknowledged that the SOCs have been in the news for all the wrong reasons and in some cases brought it upon themselves. She said the first eight months of her tenure were spent doing crisis management, but Eskom has been stabilised. None of the SOCs in her portfolio made a loss for 2014/15 and none had to be bailed out, she said.
Brown said there is little acknowledgement when something good is being done (by government). She referred to a recent McKinsey Global report that confirmed South Africa as the second largest global economy in Africa, one of the most diversified, with overall economic production that compares favourably with its Brics counterparts, and equities and bonds that attract investors.
“But if you listen to the narrative, it sounds as if we just fail,” she said.
She said South Africa does fail in directly addressing inequality, poverty and unemployment in society. Addressing this is a prerequisite for an harmonious, caring and peaceful society where families can take care of themselves. SOCs have to drive this transformation, she said.
Brown used the example of black auditing firms getting the big external audit contracts for SOCs, and said these companies have to ensure smaller black firms also get a share of the cake. “We all have to be vigilant. We can create these black industrialists and then the door gets closed behind them.”
Transformation cannot be driven from the offices and cities, she said. If that is the case, poverty, inequality and unemployment won’t be addressed.
Brown said in terms of their shareholder compacts, transformation at SOCs has to take place in a range of areas, including broad-based black economic empowerment and affirmative action. She said she was therefore surprised to hear from the BMF that its skilled members “cannot get into the SOCs, because they are not connected”.
She said she would investigate the claim and has also written to the Transnet board about allegations by EFF Member of Parliament Floyd Shivambu that workers employed by Transnet subcontractors are paid less than Transnet employees doing the same job. “Of course they are not our employees, but we have a moral obligation to look at it.” She says in the absence of conscious decisions about such matters, the community won’t heal. SOCs should not behave like any other company, she said.
Brown said she wrote to Transnet to request the appointment of a chief executive and CFO to replace Molefe and Singh, who are now at Eskom.
She said the SOCs were not yet out of the woods and can do more to drive the economy as they should. “I believe we know what we have to do in our oversight role to direct them to do so.”