The Department of Public Enterprises says that it is making progress with its plans to establish a centralised shareholding company to help it control existing state-owned enterprises (SOEs) in the country.

Intentions to establish this company – given the moniker ‘Holdco’ during these initial stages – were detailed by president Cyril Ramaphosa in March 2022.

According to the president, the centralised shareholder management model used for the Holdco is likely to entail the following:

  • A holding company that is 100% owned by the state.
  • An active shareholder approach to continuously set, monitor and evaluate SOE performance in relation to commercial and development objectives.
  • A group that will ensure the commercial sustainability of SOEs with minimum or no reliance on the fiscus.
  • The development of an appropriate capital structure for the holding company to ensure profitability and sustainability of each SOE.

Responding in a written parliamentary Q&A, public enterprises minister Pravin Gordhan said that there have been a number of studies within the government over time to determine how SOEs should be governed, and on other matters such as which SOEs are required in current context, and which are not.

“The president established the Presidential SOE Council to advise him on these and related matters. Based on a review of global experience and work done within the Department, the PSEC recommended the centralised shareholder model, which is reflected in the holding company (Holdco) proposal.

A policy paper, draft legislation and other legal documents for this proposal are still being prepared, he said. Once the governance process has been concluded, other formal processes will be pursued.

Gordhan said that the new ‘Holdco’ would be governed by an independent board that would act in the fiduciary interests of the company – and to ensure that it is insulated from undue political interference.

However, he stressed that the commercial and development mandates of Holdco will be set by the government.

“Similarly, it is anticipated that Holdco will ensure that the governance of SOEs is carried out in a transparent and accountable manner, with a high degree of professionalism and effectiveness,” he said.

“While evidence of state capture has recently been confirmed concerning the affairs of some – but not all – SOEs, the development of the shareholder management bill is based on the intent of building a capable state through among others, the adoption of globally recognised practices in managing all SOEs owned by the government of the Republic of South Africa.”

The minister said that the work that informs the establishment of the Holdco predates the state capture saga and is meant to, among others, insulate SOEs from undue influence.

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