http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 16.47Change: 0.05
R/$ = 14.25Change: 0.10
Au 1292.96 $/ozChange: -0.93
Pt 1083.00 $/ozChange: -0.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Dec 06, 2010

Gigaba signals yet more taxpayer support for State firms

Back
Newly appointed Public Enterprises Minister Malusi Gigaba speaks about government's plans for State-owned enterprises. Camerawork: Nicholas Boyd, Editing: Darlene Creamer.
 
 
 
Port|Africa|Business|Engineering|Eskom|Modular|Power|PROJECT|rail|Technology|Transnet|Africa|Manufacturing|Infrastructure
Port|Africa|Business|Engineering|Eskom|Modular|Power|PROJECT|rail|Technology|Transnet|Africa|Manufacturing|Infrastructure
port|africa-company|business|engineering|eskom|modular|power|project|rail|technology|transnet|africa|manufacturing|infrastructure



South Africa’s newly appointed Public Enterprises Minister Malusi Gigaba has signalled that government was likely to have to make further direct investments, loans and guarantees into State-owned enterprises (SoEs) in order to ensure that the infrastructure investments needed to double the rate of economic growth are made.

As an “activist State”, government perceived the role of SoEs in dealing with the prevailing infrastructure backlogs as critical to addressing the urgent challenges of poverty and massive joblessness.

Speaking at a seminar hosted by the Presidential review committee (PRC) into SoEs, Gigaba also indicated that he and his department were preparing to play a far more hands-on role in guiding the governance of the country’s key SoE’s, many of which are considered to be underperforming against their mandates.

Last week, Business Unity South Africa (Busa) voiced its concerns around the underperformance of public enterprises and noted that increased use could be made of public private partnerships (PPPs). Currently, South Africa only makes use of about 3% to 4% of such partnerships, but Busa deputy CEO professor Raymond Parsons said that this could be increased to around 25%.

There is also general public disquiet about the quality of leadership and many of these corporations, as well as at the level of executive remuneration.

However, Gigaba promised guidance on project funding structures, on executive remuneration governance structures, as well as on the recruitment, appointment and performance of board members.

He also said that he would be probing the accounting and general reporting framework for SOEs, their relationships with relevant policy departments, dividend policies and whether the SOEs need to be governed by a different statute other than the Companies Act.

The ambitious infrastructure investment programme, he argued, was a powerful instrument at government’s disposal. In fact, Gigaba told Engineering News Online that he expected investment to increase in coming years, as reaffirmed in the recently released New Growth Path.

The document, which was released by Economic Development Minister Ebrahim Patel in late November, called on government for continued and increased investment to create and develop infrastructure and to decrease the cost of doing business in the country, while stimulating the manufacturing sector, developing skills and, ultimately, creating jobs.

The South African government had also previously committed itself to spending some R800-billion on infrastructure in the next three years, of which about 40% had already been allocated to one of South Africa’s biggest SoEs, Eskom.

Gigaba lamented the decline in public sector investment over the past three decade, noting that, between 1976 and 1994, public investment in infrastructure dropped from 16% of gross domestic product (GDP) to about 4% to 5%, mainly owing to a shift towards the privatisation of these entities.

Even after 1994, investment by the SoEs into infrastructure remained low at around 5% between 1994 to 2004, when State-owned power utility Eskom and rail parastatal Transnet announced their investment plans.

This reduced spending led to a significant “funding gap”. “Had we consistently been investing in infrastructure at about 10% of GDP between 1994 and 2010, we would have invested an additional R1,5-trillion in today’s currency, which would have had a major impact on job creation and rescued million of South Africans from poverty and their reliance on social grants.”

This year, government has managed to up public investment in SOEs to about 9% of GDP.

But the poor performance of many SoEs remains a concern and also led President Jacob Zuma to establish the PRC in May, which has been appointed to review and propose ways of strengthening the enterprises.

Currently, it is estimated that South Africa has about 300 SoEs, nine of which fall under the DPE. In recent years, two of its larger enterprises, including Eskom, were bailed out, while another, the Pebble Bed Modular Reactor Company, was closed down.

The entities had also been struggling with transparency issues, appointing qualified and suitable board members, and determining and distinguishing the different roles of government when it comes to SOEs.

Also speaking at the seminar, National Planning Commission member professor Anton Eberhard pointed out that the country’s SOEs were often known for their underperformance, while also being more expensive than their competitors. “It has been shown that while access to Durban’s port is only half that of its competitors, rates are three times that of its competitors. South Africa is also significantly more expensive than any of its international competitors in the information communication and technology sector.”

He noted that it was important for the new PRC to consider such facts and to identify reforms that would speak to such realities and would be able to change the political economy of SoEs.

Meanwhile, the PRC chairperson Mangwashi Piyega assured that the committee was considering all the different challenges of SoEs in South Africa and noted that it would submit its reform recommendations to the President at the end of September 2011.

“The review by the PRC seeks to define the SOEs and their role in the developmental State, while investigating the state of SOEs in relation to the objectives of government, looking at governance and ownership, business viability, and strategic management and operational effectiveness,” she concluded.
 

Edited by: Terence Creamer
Creamer Media Editor

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
 
Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Economy News
Mzwandile Masina
The Department of Trade and Industry (DTI) has invited companies to participate in a trade and investment mission to Ghana and Nigeria from August 8 to 12.   Companies in the agriculture and agroprocessing sectors, built environment professionals, automotive and...
Cabinet has approved the Industrial Policy Action Plan (Ipap) 2016/17 to 2018/19, which seeks to achieve a higher-impact industrial policy in difficult economic circumstances, including the difficulties faced by the domestic steel industry and the drought which has...
South Africa's trade balance swung to a R2.92-billion ($206.10million) surplus in March from a revised R1.27-billion deficit in February, the national revenue agency said on Friday. Exports were up by 6.3% to R96.13-billion on a month-on-month basis, while imports...
More
 
 
Latest News
Transnet announced on Monday the implementation of a series of governance, control and monitoring measures to ensure the Original Equipment Manufacturers (OEMs) meet the company’s stringent localisation obligations and supplier development commitments. Transnet...
South African Civil Aviation Authority (SACAA) on Sunday said it had lifted the suspension of SA Express’ Air Operator Certificate (AOC). “This means that the airline may, with immediate effect, resume operating their fleet of 26 aircraft,” said SACAA in a statement.
US Democratic presidential front-runner Hillary Clinton begins a two-day tour on Monday through rural, traditionally coal-reliant parts of the eastern Appalachian region where Republican rival Donald Trump's pro-coal, anti-trade message has resonated with...
More
 
 
Recent Research Reports
Automotive 2016: A review of South Africa's automotive sector (PDF Report)
Creamer Media’s Automotive 2016 Report provides an overview of South Africa’s automotive industry over the past 12 months. The report provides insight into local demand and production, vehicle imports and exports, investment and competitiveness in the sector, as well...
Energy Roundup – April 2016 (PDF Report)
The April 2016 roundup covers activities across South Africa for March 2016 and includes details of a North Gauteng High Court Judge’s dismissal of a court application to postpone the 9.4% electricity tariff increase, which the National Energy Regulator of South...
Electricity 2016: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2016 report provides an overview of South Africa’s electricity sector, focusing on State-owned power utility Eskom and independent power producers, electricity planning, transmission, distribution and the theft thereof, besides other issues.
Energy Roundup – March 2016 (PDF Report)
The March 2016 roundup covers activities across South Africa for February 2016 and includes details of the Department of Energy’s plans to announce the preferred bidders for the first tranche of the coal independent power producer procurement programme; the Council...
Steel 2016: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2016 Report examines South Africa’s steel industry over the past 12 months. The report provides insight into the global steel market and and particularly into South South Africa’s steel sector, including production and consumption, main...
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
 
 
 
 
 
This Week's Magazine
The two spent-fuel pools at Eskom’s 1 800 MW Koeberg nuclear power station, in the Western Cape, will be full by 2018, increasing the urgency on the State-owned utility to begin pursuing alternative storage options. Koeberg has, over the past 32 years, accumulated a...
South Africa lacks the skills necessary to implement the government’s plan to build 9.6 GWe of new nuclear energy capacity, warns nuclear-qualified Quality Strategies International CEO David Crawford. “Apart from the concern about the affordability of the programme,...
DOROS HADJIZENONOS The 700-series devices provide network security monitoring, app control, URL filtering, VPN security, antivirus, antispam, antibot, and advanced intrusion prevention and detection functionality
Cybersecurity multinational Check Point has released its latest 700-series cybersecurity systems for small businesses, which draw on its international threat intelligence to provide up-to-date cybersecurity, says Check Point South Africa country manager Doros...
Daimler Trucks and Buses Southern Africa (DTBSA) saw a marked slip in new-vehicle sales in 2015 compared with 2014, with sales dropping from 5 897 units to 5 300 units. The decline came as the South African new truck and bus market declined from 31 558 units in 2014...
Group of 20 (G-20) economies threatened to penalise havens that don’t share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion. The G-20 will consider “defensive measures” against financial centers and...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $149 Close
Subscribe Now for $149