Government continues to address challenges facing State-Owned Enterprises

The office of the Deputy President has noted reports and questions from various media houses enquiring about the Deputy President’s role in supporting the turn-around strategies of various SOE’s. In particular, we note reports about the Deputy President’s role in resolving what is   reported to be a crisis at SAA.  

In this connection, we wish to reiterate the following matters of principle. 

Government remains on course to address pressing challenges facing state-owned enterprises like Eskom, SAA and the SA Post Office. We do so recognising the significance SOEs in the economy which should manifest in their continuing to discharge their mandates thus assisting the country to tackle challenges of poverty, unemployment and inequality. 

Government’s interventions in these state-owned enterprises takes place within the context of the announcement made by President Jacob Zuma that Deputy President Cyril Ramaphosa would oversee the turnaround of SAA, SAPO and Eskom.

Since that announcement was made, various steps have been taken under the leadership of Deputy President Ramaphosa, working in conjunction with relevant government departments and ministries, to help create stability in these state-owned enterprises.

These interventions comprised the finalisation of turn-around strategies with a specific focus on mandate positioning and market development, strengthening of corporate governance structures, stabilising finances and fast-tracking transformation. In this regard and with respect to Eskom, government interventions have had a direct impact in the stabilisation of electricity supply while mitigating the effects of load shedding. 

These measures at Eskom, taking place within the context of Cabinet’s five-point plan included the appointment of the CEO and CFO, stabilisation of executive management and strengthening the board, while working with Public Enterprises and National Treasury to address some of the pressing funding shortfalls of the institution. Eskom remains seized with the urgent matter of demand management and measures are being taken to accelerate the build programme.

On SAA, a 90-day Action Plan was successfully implemented and new turn-around strategy developed and adopted by Cabinet in June 2015. Currently, government is in a process of finalising the appointment of a new board of directors as part of efforts to ensure good corporate governance. The task of the new board will be to stabilise executive management by recruiting skilled professionals to implement the turn-around strategy as approved by the board and endorsed by cabinet. 

The formula to helping SAA change its fortunes is similar to that government has used at Eskom: that is to strengthen the board which in turn recruits and stabilises executive management. National Treasury, as shareholder department, continues to work with the leadership at SAA to stabilise the financial situation and to implement the turn-around strategy as approved.   

Similarly, with the South African Post Office, government interventions have led to the appointment of a competent chief executive with a clear mandate to revitalised the Post Office by stabilising labour relations, expanding service offerings of the organisation in order to regain the trust of clients and members of the public who receive essential services from the Post Office. There is now a new board of directors overseeing the implementation of the Strategic Turn-around Plan as endorsed by the executive. 

Government remains confident that interventions currently underway would in the long term lead to the sustainability of these institutions with good corporate governance structures in place and a leadership committed to the advancement of the country’s goals as set out in the National Development Plan.

We therefore urge all South Africans to give all SOEs a chance to reengineer their operations, sharpen their focus in a considered and responsible manner. We should respect the demarcation of roles and responsibilities especially when it comes to operational decisions which are delegated to boards and executive management. The Deputy President therefore cannot be involved in operational matters at SAA or any other SOE as suggested by members of the media. 

Enquiries:  Ronnie Mamoepa on 082 990 4853

Issued by: The Presidency

Pretoria