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President Cyril Ramaphosa has failed his first key test on economic structural reform after it emerged that the Department of Public Enterprises plans to create a new investment State Owned Enterprise (SOE) to manage other SOEs, with a direct reporting line to the President’s office.

The DA rejects this. Ramaphosa’s much vaunted push for structural reform is clearly a mirage because, not only does he want to keep dysfunctional SOEs plugged into to the state for endless bailouts, his ANC government has no intention of opening up the SOE sector to private investment. Apart from anything else, this would close the taps for cadres and the loyal elites who depend on ANC largesse.

Media reports indicate that the Department of Public Enterprises is working on a plan to create a new investment company called the ‘Asset Management State Owned Company’ that will manage government’s stakes in SOEs such as Eskom, Denel and Transnet. The company will be 100% owned by the government and is expected to report directly to the Presidency.

That this proposal is even being considered as a solution to ailing SOEs reveals the depth of policy deficit besetting Ramaphosa’s false ‘new dawn’. Recently, we have watched in dismay as the Minister of Mineral Resources and Energy, Gwede Mantashe, did everything in his power to thwart and delay the opening up of the energy sector to Independent Power Producers.

SOE’s have failed and the market failure of this state model is plain for all to see. Creating a separate slush fund to massage failure is bad policy and will continue to keep the South Africans taxpayer responsible for endless bailouts. Allowing private sector investment in SOEs will lessen their reliance on the fiscus while opening up opportunities for efficiency and competitiveness.

SOEs were at the heart of State capture during the Zuma years. Any intervention to reform the sector should be to reduce State involvement and not create more opportunities for abuse by corrupt politicians.

Issued by DA Shadow Minister of Public Enterprises, Ghaleb Cachalia