Role of SA State-Owned Enterprises in Africa: Department briefing

Meeting report

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
1 June 2005
ROLE OF SA STATE-OWNED ENTERPRISES IN AFRICA: DEPARTMENT BRIEFING

Chairperson: Mr Y Carrim (ANC)

Documents handed out:
Department PowerPoint presentation on role of SA State-owned enterprises in Africa

SUMMARY
The Department of Public Enterprises briefed the Committee on the role of South African State-owned Enterprises (SOEs) in Africa, and stressed the importance of infrastructure investment. Officials outlined the Department’s objective as well as projects and achievements of important SOEs, namely ESKOM, Transnet, SA Airways (SAA), arivia.kom, and Denel. The meeting served merely as information exchange and to make the Department aware of issues that would have to be addressed fully at their next meeting in March 2006 with the SOEs. The Department would then have to provide an overall strategy.

MINUTES
The Chairperson stressed that the aim of the meeting was merely an information exchange; and that work was in progress. This Committee had been constituted in August 2004, and had not yet discussed the role of SOEs in Africa. The Ministry and Department were currently engaging with all SOEs in order to ensure a coordinated, coherent, and cohesive strategy. In March next year, the Committee would invite the Department and SOEs to discuss their role in Africa.

Department briefing
Mr B Gasa, Chief Director of Policy Issues, briefed the Committee on the State Owned Enterprises’ (SOEs) role and investments in Africa. Poor infrastructure was a critical barrier to accelerating growth and poverty reduction. The Commission for Africa Report 2005 had recommended additional investment in infrastructure of US$20 billion per year. To achieve this, developed countries should provide US$10 billion per year up to 2010, and further increase their aid to US$20 billion per year in the following five years. The government’s objective was to investigate where and how SOEs operated, what projects they engaged in, and how their participation contributed to economic growth and development in Africa. He then outlined projects and achievements of important SOEs in Africa, namely ESKOM, Transnet, SA Airways (SAA), arivia.kom, and Denel. These and other SOEs had a major role to play in the development of the continent (see document).

Discussion
The Chairperson informed the Department that the Committee intended to undertake a study tour to three or four African countries, probably in 2007, to investigate the performance of SOEs. This was the first time the Committee had engaged with the Department on the SOEs’ role and investments in Africa. The Committee would develop a set of questions in this regard and send it to the Department, which they could then pass on to the SOEs.

Mr Z Madasa (ACDP) commented that the crucial question they had to address was how the SOEs were positioned strategically in Africa.

Mr Gasa replied that the current perception was that the SOEs invested in any projects they deemed profitable. He agreed that there was a lack of coordination and integration.

The Chairperson added that the Department had to provide an overall strategy at the meeting in March next year. This strategy had to be developed in consultation with SOEs. The Minister was meeting with the SOEs quarterly for this purpose. In the upcoming meeting, the Department would have to inform the Committee how they ensured SOE’s coordination, and whether the Department’s capacity was adequate.

Ms L Yengeni (ANC) said that besides the overall strategy, the Department also had to provide country specific information regarding projects, priorities, and investments.

Mr Gasa replied that they had to develop guidelines first, explaining that at an operational level, SOEs were currently deciding independently.

In answer to Mr S Kholwane (ANC) asking what the Department’s plans were to achieve SOE coordination and what the current situation was like, Mr Gasa said that they were in the process of addressing this issue, but were not able to give comprehensive information at this time.

Mr P Hendrikse (ANC) queried if the Department could provided information by the end of the week on the Mozal aluminium smelter investment in Mozambique, particularly on how many jobs had been created and how it had impacted on the people in the area. This information would be useful for the Committee’s visit to Coega in the following week, and the questions around the proposed Coega Aluminium Smelter within the Coega Industrial Development Zone in Port Elizabeth. He was impressed by arivia.kom’s work, stressing that this company should not be privatised.

Mr Gasa replied that they would try to provide the required information regarding the Mozal aluminium smelter investment in Mozambique and agreed that the company arivia.kom’s performance was admirable.

Mr H Bekker (IFP) commented that the strategic plan could only be measured in terms of their Annual Report and financial statements. SOEs should separate the African projects and not include them in the major expenditure framework. A distinction within the financial statements regarding SOEs was needed.

Mr Gasa answered that they would look into this suggestion.

The Chairperson added that in the upcoming meeting in March 2006, the Committee would like an assessment of the socio-economic-costs and benefits of the projects. It further had to be investigated how their internal and external projects interrelated.

Mr P Rabie (DA) queried whether Environmental Impact Assessments (EIA) had taken place regarding the ESKOM projects that aimed to build hydro-electric power stations in Angola and Namibia.

Mr Gasa replied that they were currently awaiting the results of the EIA and that the implementation of the project would depend on the final EIA outcome.

Mr R Nogumla (ANC) requested that the Department provide information at the forthcoming meeting on the experiences of SOEs in specific countries, particularly negative experiences. The absence of policies was creating problems for Telkom, for instance. Mr Gasa welcomed this suggestion.

Mr C Gololo (ANC) asked whether SOEs or the South African government were responsible for business negotiations with other African governments. He further asked about the trading of personnel in African countries.

Mr Gasa replied that the responsibility for business negotiations depended on the project. The Department would only engage in bilateral negotiations between governments. If however arivia.kom, for instance, formed a joint venture with another ICT company in Nigeria, the SOE would be responsible for the negotiations, but the Department would be continually updated. The International Relations Unit within the Department helped to address this issue.

Mr Madasa (ANC) commented that policies were also needed on human resource development, risk management, negotiation skills, and donor funding. The Chairperson asked Mr Madasa whether he could pass on more information about the infrastructure service delivery to the Committee.

The Chairperson reminded Members that a World Bank official was addressing the Committee on infrastructure service delivery on 7 June. Members suggested inviting related Committees such as Transport, Minerals and Energy, Foreign Affairs, Trade and Industry; related NCOP Select Committees; and relevant non-governmental organisations (NGOs). The Department would attend the meeting as well, with Mr Gasa as representative.

The Chairperson further reminded Members that they were leaving for a visit to the Eastern Cape on the afternoon of 9 June.

The meeting was adjourned.