#Budget2016 / Johannesburg - Finance Minister Pravin Gordhan has thrown down the gauntlet to state-owned enterprises (SOEs) and business by demanding they be more accountable.
Credit: AP
Finance Minister Pravin Gordhan is working to prevent "state capture" by forcing state-owned enterprises to be more accountable. Picture: Schalk van Zuydam, APGordhan yesterday called on South Africans to assist the government in acting as a watchdog over SOEs and for the private sector to find a better balance between profit-making and social objectives.
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“Transactioning between business and the government is rotten,” Gordhan said at a post-Budget breakfast held in Cape Town.
SOEs needed to be run by boards not driven by self-interest, he told Business Report afterwards.
“What you have… is the phenomenon of state capture as the secretary-general of the ANC has said to the point where basic control mechanisms are lost,” he said.
State capture is the phenomenon in which outside interests, such as the private sector or criminal networks, are able to bend government laws and regulations to their benefit through corrupt transactions with officials and politicians.
“Those driving a particular deal have virtually no resistance, no accountability, no transparency and no oversight over what actually happens and it is a potential disaster.”
Government control and regulation was only “one part of the recipe”.
“The bigger part of the recipe is for the public to hold these people to account. The bigger part of this situation is that business morality in South Africa needs to change and the kind of ethical framework we work with needs to change.
“How can you be comfortable in your skin if you are actually depriving a state entity of billions of rands? Public articulation of ‘we are helping the poor, we are here for the poor’ is verbal garbage because the true intent is about self-interest,” he said.
He reiterated that the Treasury was not a piggy bank for state entities to dip into.
“There are new, creative possibilities of crowding in funding which will enable these entities to have the equities they require, reduce dependency on the fiscus but also because there are other eyes looking into the SOEs, they need a greater level of accountability that they may not have had before.”
The president had set up a ministerial committee to come up with solutions.
Gordhan said having R475 billion in guarantees extended to SOEs and development finance institutions meant the government needed to take a closer look at their financial viability.
“And often there’s irritation with that in the system by management, for example, in some of these entities or boards (of SOEs), and again a public discourse would help because they must learn to become accountable for public institutions that are supposed to be run well and not dependent or jeopardising the fiscus.”
On SOE privatisation, Gordhan said: “There is no privatisation of any kind. We are saying: get the private sector in, get trade union companies in, get investment companies in. If there is a big stokvel that has R2bn available and they are willing to invest it in one of these entities, open it up.
“For SAA, for example, we have mentioned a minority equity stake. We are not compromising on state control, state ownership. Also, the private sector in itself is not necessarily efficient. It also has inefficiencies, but the mix might give us a better proposition.”
Gordhan also called on the private sector to re-evaluate its role in South Africa’s growth and development.
“A good entrepreneur who... understands where we are in South Africa would have a mix of self-interest in terms of profit-making, salary, bonus et cetera and to have creative energies compensated and at the same time having social objectives of creating more jobs, bursaries and learnerships,” he said.
Businesses had to take a longer-term view, he said.
“The effort is about recognising that while government is a 30 percent or so player in the economy, 70 percent or so is in the hands of the private sector (of all sizes).
He said while business and the government might have a different world views on some questions, “the essence of being South African is to find common ground”.
BUSINESS REPORT