Chairperson, hon Minister, hon members, officials from the various SOEs and distinguished guests, I rise in support of this Budget Vote. I would like to address in some measure the present and the future role of SOEs. From the outset, I would like to quote one of our Polokwane resolutions:
A developmental state should maintain a strategic role in shaping the key sectors of the economy, including the mineral and energy complex and the national transport and logistics systems.
This includes strengthening the role of state-owned enterprises and ensuring that, whilst remaining viable, agencies and utilities as well as companies in which the state has a significant shareholding, respond to a clearly defined public mandate and act in terms of overarching industrial policy and economic transformation objectives.
One of the major transformation objectives is the creation of decent jobs, as many of my colleagues have said. Other objectives are to close the large gap between the rich and the poor, and to develop skills training, skills training and more skills training.
In our oversight work, at the various SOEs, I am quite convinced that institutions or enterprises or entities - or whatever you call them - such as Transnet, Eskom, Denel and SAA have the capacity to train at the highest level.
The first step would be for society to be led by the government, especially SOEs, the private sector, labour and civil society in close support, to agree on a vision of doubling the size of the economy within a generation. State-owned enterprises constitute one of the many instruments available to government in carrying forward the state's development agenda.
Some of the reasons why it is important for SOEs to remain in government control include, one, reducing dependence on other nations or multinational co-operations; two, building a strong position from which to secure management and technological expertise; three, developing and promoting local industries, which is very important; four, making investments where the private sector is either unwilling or unable to invest; five, forging a strong tool for national development; and, finally, establishing a more effective economic and political basis for dealing with other countries.
There are currently nine SOEs, as you all know, under the auspices of the Department of Public Enterprises. All nine are listed in Schedule 2 of the Public Finance Management Act. They range from aviation, transport, energy, mining, arms manufacturing, ports, forestry to information communication and technology.
The distinguishing factor of these entities is that they have borrowing powers whenever market conditions suit their credit-worthiness. That means the fiscus doesn't have to be milked all the time.
The Department of Public Enterprises' revised mission and strategic focus for SOEs revolves around actively engaging stakeholders within and outside government, so that the role of each SOE is aligned with broader economic policies and strategies, and to ensure that industry-specific policies and regulations support this alignment. Furthermore, the department's immediate focus is to align SOE planning and performance with the outcome defined by the national Medium-Term Strategic Framework.
In line with these objectives, the department has developed a state shareholder management model to bring coherence and consistency to the management of all SOEs. This model will allow the government to systematically leverage SOE capacity to achieve strategic national objectives without compromising their financial sustainability. I repeat: "... leverage SOE capacity to achieve strategic national objectives without compromising their financial sustainability".
A key focus will be to gain greater recognition for SOEs as strategic instruments of industrial policy. In this regard, the following applies: define a clear medium-term strategic intent for each of the SOEs; ensure the ongoing commercial viability of the SOE through a constant process of monitoring and risk management and, where required, intervention; ensure the competent management of each of the SOEs and that boards fulfil their fiduciary duties; align the activities of the SOE with the relevant sector policies; facilitate co-ordination between SOE programmes and relevant government departments; and, lastly, ensure that the SOEs are adequately capitalised to respond to changing market conditions.
The infrastructure building programme provides SOEs with a great opportunity to help South Africa's economy in a big way. For example, in the procurement of large capital goods, government needs to ensure that a significant proportion is produced in South Africa. This requires a strategic change in the supply of equipment, while also addressing South Africa's weakness in the economy by developing the local means of production and creating conditions to supply these means of production, not only to the SADC region, but also to the rest of Africa, thereby boosting infrastructure development.
In line with the country's new industrial policy, those SOEs in the manufacturing business, like Denel and the SA Forestry Company Ltd, will need to put greater emphasis on manufacturing finished products - and not only on component parts - in order to boost exports. Innovation and research should also form part of SOEs' strategic objectives, as it does, but now to a greater extent. The SOEs' procurement policies also need to take into account the role played by the small, medium and micro enterprises in the economy, especially in terms of job creation.
Now, this question of SMMEs has been a sore point for a long, long time. I think that it is about time that we really work out a system in terms of which SMMEs can get started, be mentored and be productive. I think we have failed the SMME sector in our country. [Applause.]
There is no doubt that a large section of civil society views SOEs as having a huge role to play in the county's economic development. I think that a large majority of us do believe that. Some of the SOEs have not fully realised their potential - that is something we also need to recognise. The important thing, however, is that government has now taken up the issue of SOEs, outlining what role these SOEs are expected to play in the country's development agenda.
Nevertheless, the government's main task, as a developmental state, is to reorient SOEs towards the twin goal of attaining our socioeconomic developmental goals and maximising operational efficiency and financial sustainability.
In conclusion, SOEs can play a significant role if all stakeholders - private, public, civil society - join hands in building a development agenda for a strong economy, resulting in a bedrock for social justice. I thank you. [Applause.]