The Presidency of South Africa has withdrawn a bill that proposed the creation of the State Asset Management SOC, a centralised holding company that would oversee and manage strategic state-owned enterprises. The bill, championed by President Cyril Ramaphosa's office for over three years, faced criticism for failing to address financial and organisational challenges at key national entities. The department of planning, monitoring and evaluation quietly withdrew the bill without providing reasons.
The proposed State Asset Management SOC would have centralised ownership and control of key state-owned enterprises such as Eskom, Denel, and Transnet. The National State Enterprises Bill was first published for public comment in September 2023, drawing comments from the public, businesses, and lenders. Critics argued that a single holding company offered no protection against political interference in the administration of state-owned enterprises.
Critics of the bill also raised concerns that it blurred lines of accountability and decision-making between the board of the holding company and subsidiary boards. Key decisions such as capital expenditure and allocation would have sat with the holding company, rather than subsidiary company boards. Furthermore, the bill would have exempted the holding company and its subsidiaries from the Public Finance Management Act, sparking concerns over political interference and transparency.
The business community argued that the bill's exclusive state shareholding stifled private sector participation and public-private partnerships. Old Mutual's fixed income investor Futuregrowth, which has a large exposure to state-owned enterprises' bonds, expressed concerns over the bill's impact on the existing legislative framework. Futuregrowth's head of credit, Olga Constantatos, questioned how the new legislation would solve problems without reviewing all other applicable laws.
The department of planning, monitoring and evaluation had requested R615m from the National Treasury as seed capital for the holding company. The proposed holding company would have overseen several key state-owned enterprises, including Eskom and Transnet, which have shown signs of improvement in recent years. Eskom reported a profit after tax of R30.3bn for the financial year ending March 2026.
Minister of electricity and energy Kgosientsho Ramokgopa has stated that the taxpayer will no longer provide multibillion-rand bailouts and will not accept aggressive tariff hikes under the Eskom 2.0 blueprint. Transnet also reported a profit of R4.6bn in the year ended March, its first profit in four years. However, other state-owned enterprises such as Prasa and Denel continue to face challenges.
The government is again seeking a private equity partner for the troubled South African Airways. Most state-owned enterprises previously reported to the defunct department of public enterprises. The withdrawal of the bill leaves the future of state-owned enterprises uncertain, with ongoing efforts to address their financial and organisational challenges.
Key points
- The Presidency of South Africa withdraws a bill to create a centralised holding company for strategic state-owned enterprises amid criticism.
- Critics raised concerns over the bill's impact on accountability, transparency, and private sector participation.
- The proposed holding company would have overseen key state-owned enterprises, including Eskom and Transnet.
