PRESIDENTIAL REVIEW COMMITTEE ON STATE OWNED ENTERPRISES
Policy for the
Establishment and Deestablishment of SOEs
PRC on SOEs: Business Case & Viability
Workstream
Bongani Gigaba
3/9/2012
Table of Contents
1. Executive Summary
2. PRC on SOE Problem Statement
3. Focal Point
4. Term of Reference
5. Introduction
6. Initial Assumption
7. Background
8. As-Is (“Status Quo”)
9. Empirical Analysis
10. International Experience
11. Key Findings
12. Recommendations
13. Reference List
1
Executive Summary
1.1 The purpose of this exercise is to conduct an investigation that seeks to
determine whether a policy for the establishment and de-establishment of SOEs
exist taking into account global best practice.
1.2 In a study conducted by the KPMG on behalf of the PRC on SOEs, it is
estimated that circa 502 SOEs i.e. National, Provincial and Local SOEs.
1.3 The majority of the SOEs were established from the late 19the century to date in
order to fulfil a specific economic or social responsibility of government.
1.4 Technically, once the state’s policy objective/s is achieved, the relevant SOEs
should be dis-established.
1.5 In SA, SOEs are regulated by various pieces of legislation, and policy
frameworks. Amongst others, these include the Public Finance Management Act,
Municipal Finance Management Act, Municipal Systems Act etc. On 4 April 2004,
Cabinet approved as an interim measure, the broad process for the creation of
national public entities.
1.6 Our global benchmarking exercise includes China and Norway.
1.7 The key findings of our study could be summarised as follows:

That despite its limitations, a policy framework for the establishment and
de-establishment of SOEs at national, provincial and local spheres of
government exists.

The accounting officer for a public entity that is not listed in either Schedule 2
or 3 must, without delay, notify the National Treasury, in writing, that the
public entity is not listed. However, this does not apply to an unlisted
public entity that is a subsidiary of a public entity, whether the latter is
listed or not.

As at 30 June 2010, approximately 13 per cent of municipal entities in South
Africa could be classified as service utilities. On the other hand, private
companies and section 21 companies including trusts accounts for 87
per cent of municipal entities, per type. This is despite Municipalities
having been encouraged to take all the necessary steps to convert noncompliance structures like section 21 companies, trusts and other
forms.

Twenty eight per cent of municipal entities are concentrated in the
Development and Planning, and underweight in what could be classified
as key service delivery by function.
1.8 Based on the key findings of the exercise, the BC work stream wishes to
recommend the following:

That the South African government should, as a prerequisite, clearly establish
and articulate its goals for State involvement in the economy.
2

That the PFMA should be amended so that the listing of SOE subsidiaries,
i.e. Schedule 2 and 3 SOEs, becomes compulsory.

Both the MFMA and Municipal Systems Acts should be amended in order to
avert the creation and proliferation of non-compliance structures e.g. section
21 companies, trusts and other forms
3
2. Presidential
Statement
Review
Committee
on
SOEs
Problem
How can SOEs optimally contribute to development and transformation of South
Africa while remaining viable and effective?
3. Focal Point
SOEs enabling environment – Legislation, Governance, Ownership, Oversight,
Operational structure and systems
4. Term of Reference
Policy for the establishment and de-establishment of SOEs
5. Introduction
5.1 The role of SOEs, more especially, after the Second World War continue to
occupy a significant role in many countries. In Sub-Sahara Africa, the SOEs
remain the key suppliers of social services etc.
5.2 The IMF argues that, “…the inefficiency of the state-owned firms, combined with
the attendant state enterprise sector deficits, are hindering economic growth,
making it difficult for people to lift themselves out of poverty…” (p1, Bureaucrats
in Business, The Economics and Politics of Government Ownership, 1995)
5.3 The above mentioned debate seeks to confirm the importance of a policy for the
establishment and de-establishment of SOEs, more especially, in developing
countries
5.4 The approach and research methodology to be adopted in this paper is empirical
in nature.
5.5 The structure of the position paper is as follows. In Section 1-6, we have briefly
reviewed and outlined the brief, PRC’s Problem Statement, the relevant Focal
Point as well as the Term of Reference including the initial hypothesis. Literature
review will be dealt with under Section 7. In Sections 8 and 9, we have sought to
address the background to the Term of Reference including the As-Is Analysis.
Global benchmarking is covered in details in Section 10 of this report. The key
findings and PRC recommendations are addressed in Sections 11 and 12,
respectively.
6. Initial Assumption
Assess whether a policy for the establishment or de-establishment of SOEs exist
in South Africa.
4
7. Background
7.1 The purpose of this position paper is to determine whether a policy for
establishment and de-establishment of SOEs exist in South Africa.
7.2 Basu argues that, “… in an economy there are four types of economic activity:
first, those which are privately remunerative - provided by market through Directly
Productive Investments (DPI); second, those which are socially profitable but not
privately remunerative – provided by State, like road building, irrigation, through
Social Overhead Capital (SOC); and third, those which are privately remunerative
but not capable of private sector execution, like heavy industry, high technology
involving capital intensive investments like power, transportation, etc. – also
provided by the State with/without the help of the market; and fourth, those which
are natural monopolies. PEs are set up to undertake the second, third and
fourth category of activity…” (p11-12, Public Enterprises: Unresolved
Challenges and New Opportunities, 2008)
7.3 In a study conducted by the KPMG on behalf of the PRC on SOEs, it is estimated
that circa 502 SOEs exist in South Africa. SA’s SOEs straddle across all three
spheres of government i.e. National, Provincial and Local.
7.4 The majority of the SOEs were established from the late 19the century to date in
order to fulfil a specific economic or social responsibility of government e.g.
address specific market imperfections in the economy, service delivery, provide
key infrastructure, further enhance SA’s industrialization strategy etc.
7.5 Technically, once the state’s policy objective/s is achieved, the relevant SOEs
should be dis-established. To date, empirical evidence seeks to confirm that a
number of SOEs specifically at national (i.e. Pebble Bed Modular Reactor etc.)
and municipal level have had to be dis-established. With respect to municipal
entities, see section 9.3 of this paper.
7.6 In SA, SOEs are regulated by various pieces of legislation, and policy
frameworks. Amongst others, these include the Public Finance Management Act,
Municipal Finance Management Act, Municipal Systems Act etc. On 4 April 2004,
Cabinet approved as an interim measure, the broad process for the creation of
national public entities.
5
8. As-Is (“Status Quo”)
8.1 National and Provincial Public Entities
8.1.1
On 4 April 2001, Cabinet approved as an interim measure, the broad process
for the creation of national public entities. It is anticipated that the broad
process will remain in operation until it has been replaced and/or
updated by an appropriate institutional framework for public entities.
8.1.2
Both Ministers of the Public Service and Administration (MPSA) and Finance
(MoF) play a key role in the determination of the mandates for the
creation, listing and classification of national public enterprises.
8.1.3
The competency of the MPSA is aimed at the proper macro organisation
of the Public Service by ensuring that any new or existing public
function is allocated / transferred to the appropriate sphere of
government, department and/or PE and to eliminate any duplication of
functions. In cases where a PE is established for a new or existing function,
the MPSA must make a determination regarding the allocation/transfer of
such a function to a PE. (p2, Interim Guide for Creating Public Entities at the
National Sphere of Government, March 2004)
8.1.4
The competency of the MoF is aimed at the establishment of uniform
reporting and listing of all PEs, nationally and in the provinces, by
ensuring that any new or existing PE is listed and accountable to
Government. This competency involves making a determination regarding
the allocation of monies from Government, including statutory funding, to a
public entity or future public entity and ensuring that such an entity’s funding
requirements and mandate are within the ambit of the MTEF. (p3, Interim
Guide for Creating Public Entities at the National Sphere of Government,
March 2004)
8.1.5
In terms of the broad interim process, there are four critical steps that
should be followed in order to create a national public entity. These are:
 Step 1: Preparing a business case
 Step 2: Assessing the business case
 Step 3: Formalising the establishment of a national public entity
 Step 4: Implementing the establishment of a national public entity
8.1.6
As it relates to Step 1, an executive authority is required to prepare a
business case for the intended national public entity. It should take into
account the following i.e. situation analysis and strategic plans,
identifying assessing service delivery options, governance issues and
recommending the appropriate service delivery option. The projected
impact of the proposed national public entity on the operations of the
department during the MTEF period should be quantified.
8.1.7
Once an executive authority has recommended the appropriate service
delivery option and, submitted the business case, an MPSA and MoF joint
evaluation panel will assess the business case for the intended national
public entity i.e. Step 2. If the application meets the minimum
requirements of both MPSA and MoF, consent will be granted in writing
to the establishment of the national public entity.
6
8.1.8
Thereafter, the relevant department must viz. (a) submit the necessary
motivation and consent of the MPSA and the MoF to the relevant
portfolio committee for discussion before it is submitted to Cabinet;
then (b) inform Cabinet of the consent of the MPSA and MoF and request
Cabinet approval to introduce a bill in Parliament for establishing the
national public entity; then (c) table a Bill in Parliament for establishing
the public entity (Step 3)
8.1.9
To effect the establishment of a national public entity (Step 4), the executive
must viz. (a) approve the initial organisation and post establishment
structure for the public entity; (b) appoint the Members of the controlling
body/board for the public entity in terms of its establishing act; (c) in
the case where a PE is established for a new function, allocate/transfer
resources to the PE where appropriate; (d) effect the transfer of the
function and concomitant resources to the public entity based on a
number of set principles; (e) request in writing the listing and
classification of a public entity in terms of the PFMA; and (f) ensure that
the public enterprise complies and submits borrowing programme and
budget projection. (p4-8, Interim Guide for Creating Public Entities at the
National Sphere of Government, March 2004)
8.1.10 Over and above the relevant policy processes, a policy for establishment
and de-establishment of SOEs is regulated by various pieces of
legislation. Amongst others, these include the Public Finance Management
Act, Municipal Finance Management Act, Municipal Systems Act etc.
8.1.11 In terms of Chapter 6 of the Public Finance Management Act (Act No. 1
of 1999) (“PFMA”), an accounting authority for a public entity, i.e.
Schedules 2 (Commercial SOEs) and Schedule 3 (National government
enterprises, Provincial government business enterprises, National public
entities and Provincial Public entities), should promptly inform the National
Treasury on any new entity which that public entity intends to establish
or in the establishment of which it takes the initiative, and allow the
National Treasury a reasonable time to submit its decision prior to
formal establishment. A public entity may assume that approval is granted if
it receives no response from the executive authority on a submission within
30 days or within a longer period as may be agreed to between itself and the
executive authority. (Chapter 6, PFMA)
8.1.12 The accounting officer for a public entity that is not listed in either
Schedule 2 or 3 must, without delay, notify the National Treasury, in
writing, that the public entity is not listed. However, this does not apply
to an unlisted public entity that is a subsidiary of a public entity,
whether the latter is listed or not. (Chapter 6, PFMA)
8.1.13 In the case of unlisted public entities, the PFMA empowers the Minister,
by notice in the national Government Gazette to amend the Schedule 3
to include in the list all public entities that are not listed, and make
technical changes to the list. (Chapter 6, PFMA)
8.1.14 The following institutions are to be excluded from the Schedule 3 list of listed
public entities viz. (a) A constitutional institution, the South African Reserve
Bank and Auditor-General; (b) Any public institution which functions
outside the sphere of national or provincial government; and (c) Any
institution of higher education.
7
8.1.15 The PFMA stipulates that before a public entity concludes any of the
following transactions, the accounting authority for the public entity
must promptly and in writing inform the relevant treasury of the relevant
transaction and submit relevant particulars of the transaction to its
executive authority for approval of the transaction: (a) Establishment or
participation in the establishment of the company; (b) Participation in a
significant partnership, trust, unincorporated joint venture or similar
arrangement; (c) Acquisition or disposal of a significant shareholding in a
company; (d) Acquisition or disposal of a significant asset; (e)
Commencement or cessation of a significant business activity; and (f) A
significant change in the nature or extent of its interest in a significant
partnership, trust, unincorporated joint venture or similar arrangement
8.2 Local Government Public Entities
8.2.1 In terms Clause 82(1) of the Local Government Municipal Systems Act
(Act No. 32 of 2000), “… if a municipality intends to provide a municipal
service in the municipality through a service delivery agreement with a
municipal entity, it may- (a) alone or together with another municipality,
establish in terms of applicable national or provincial legislation a company, a
cooperative, trust, fund or other corporate entity to provide that municipal
service as a municipal entity under the ownership control of that municipality
or those municipalities; (b) alone or together with another municipality,
acquire ownership control in any existing company, cooperative, trust, fund or
other corporate entity which as its main business intends to provide that
municipal service in terms of a service delivery agreement with the
municipality; or (c)
establish in terms of subsection (2) a service utility to
provide a service that municipal service
(2)(a) A municipality establishes a services utility in terms of subsection
(I)(c) by passing a by-law establishing and regulating the functioning
and control of the service utility. (b) A service utility is a separate juristic
person. (c) The municipality which established the service utility must
exercise ownership control over it in terms of its by-laws...” (p78, Local
Government Municipal Systems Act, Act No. 32, 2000)
8.2.2
Chapter 10 (Municipal Entities) of the Local Government: Municipal Finance
Management Act (Act No. 56 of 2003) states that when considering
establishment of or participation in a municipal entity, a municipality
must determine the function or service that entity would perform on its
behalf and make an assessment of the impact that the shift would have
on the municipality’s staff, assets and liabilities. The municipal manager
has, in accordance with section 21A of the Municipal Systems Act, make the
proposal public and invite local community, organised labour and other
interested parties to submit to the municipality comments or representations
in respect of the matter. Other key stakeholders may include e.g. the
National Treasury and relevant provincial treasury, the national and
provincial departments responsible for local government and the MEC
for local government in the province. (p92-94, Local Government:
Municipal Finance Management Act, Act No. 56, 2003)
8.2.3
For the purposes of this section, “establish” includes the acquisition of an
interest in a private company that would render that private company a
municipal entity.” (p92-94, Local Government: Municipal Finance
Management Act, Act No. 56, 2003)
8
8.2.4 “… If a municipal entity experiences serious or persistent financial
problems and the board of directors of the entity fails to act effectively,
the parent municipality must either-(a)
take appropriate steps in terms of
its rights and powers over that entity, including its rights and powers in terms
of any relevant service delivery or other agreement; (b)
impose a financial
recovery plan, which must meet the same criteria set out in section 142 for a
municipal recovery plan; or (c)
liquidate
and
disestablish
the
entity…” (p110, Local Government: Municipal Finance Management Act, Act
No. 56, 2003)
8.2.5 Municipalities are encouraged to take all steps necessary to convert
non-compliance structures like section 21 companies, trusts and other
forms (p13, Modernising Financial Governance, Implementing the Municipal
Finance Management Act, 2003 – Updated Version: August 2004 )
9
9. Empirical Analysis
In South Africa the SOEs are regulated by a number of broad policy frameworks and
various pieces of legislation. Whilst the list of SOEs is made up of institutions that
operate at national, provincial and local spheres of government, it continues to
evolve.
9.1 Assumptions
9.1.1
Where possible, both objective and subjective data will be used in the
exercise.
9.1.2
Other than PFMA, no central data repository and up to date list exists in
respect of national, provincial and local SOEs that were either established or
de-established in SA
9.2 National and Provincial SOEs
9.2.1
In a study conducted by KPMG on behalf of the PRC on SOEs, it is estimated
that there are approximately 502 national and provincial SOEs (including
subsidiaries) operating in South Africa. For further details, see the
Governance & Ownership Workstream report on the Database.
9.2.2
Amongst others, the list of newly established and proposed SOEs includes
the following viz. Broadband Infraco, State’s Mining Company, and proposed
pharmaceutical firm.
9.2.3
De-established national and provincial public entities include e.g. Pebble Bed
Modular Reactor etc.
9.2.4
The list of established and de-established national and provincial SOEs is not
exhaustive, and this is mainly due to a lack of a central data repository on
SOEs.
9.3 Local Government SOEs
9.3.1
In terms of Section 74 and 178 of the MFMA, municipalities are required to
report to the National Treasury information on all municipal entities,
including those structures in existence prior to the MFMA and MSA
framework taking effect. (p1, Updated Municipal Entities Report, information
obtained from Municipalities as at 30 June 2010, National Treasury)
9.2.2
As at 30 June 2010, there were 63 Municipal Entities. The largest
concentration of municipal entities is in Gauteng (26), fifteen of which
are controlled by the City of Johannesburg. The second largest number
of municipal entities is located in the Eastern Cape (11) and KwaZuluNatal (9). The remaining balance straddles across the remaining six
provinces. From the sixty three municipal entities, National Treasury was
advised that five were in the process of being dis-established (i.e. Kouga
Cultural Centre (Eastern Cape); Temba Roodeplaat Water Services Trust and
Tshwane Centre for Business Information and Support (Gauteng); Govan
Mbeki Housing Trust Company and Mbombela Development Trust
(Mpumalanga)), while one entity is under review (i.e. Uthukela Water
(KwaZulu-Natal). (p2, Updated Municipal Entities Report, information
obtained from Municipalities as at 30 June 2010, National Treasury)
10
Graph 1: Municipal Entities per Province as at 30 June 2010
Northern Cape,
Western Cape,
1
4
North-West, 2
Mpumalanga, 4
Eastern
Cape, 11
Limpopo, 2
Free State, 4
KwaZuluNatal, 9
Gauteng, 26
Source: National Treasury
9.2.3
As at 30 June 2010, thirty four municipal entities were dis-established.
Graph 2: Dis-established Municipal Entities
Northern Cape,
1
North-West, 0
Mpumalang
a, 0 Limpopo, 0
Western Cape,
2
Eastern
Cape, 4
KwaZulu-Natal,
7
Gauteng, 19
Source: National Treasury
11
Free State, 1
9.2.4
The following chart depicts municipal entities by function.
Graph 3: Municipal Entity Function as at 30 June 2010
Markets
2%
Manufacturing
2%
Tourism
11%
Development &
Planning
28%
Housing
14%
Finance &
Administration
6%
Transport
Buses &
Roads ElectricityMuseums &
Services Art Galleries
5%
3%
2%
Water
8%
Public Safety
1%
Solid Waste
2%
Sewerage Community
Other 5% Halls & Facilities
3%
8%
Source: National Treasury
In graph 3, it is interesting to note that circa twenty eight per cent of municipal
entities are concentrated in the Development and Planning, and underweight in
what could be classified as key service delivery by function.
9.2.5
All sixty three municipal entities per type are listed in the graph below.
Graph 4: Municipal Entity Types as at 30 June 2010
Multijurisdictional
Service Utility
2%
Service Utility
11%
Trust
9%
Private
Company
40%
Section 21
Company
38%
Source: National Treasury
12
Graph 4 seeks to confirm that approximately 13 per cent of municipal
entities could be classified as service utilities. On the other hand,
private companies and section 21 companies including trusts accounts
for 87 per cent of municipal entities, per type.
9.1.5
Over the years, a number of SOEs have both been established and deestablished.
10.
International Experience
10. 1 China
10.1.1 In March 1998, reform of the sick state sector moved to the top of the political
agenda in China (Special Report: Business in China, The Economist)
10.1.2 The then prime minister, Mr. Zhu Rongji, enunciated the doctrine of zhu
fangxiao (“grasp the big, let go the small”), which remains the guiding
principle of SOE restructuring. It means that the government wants to keep
control of the biggest and most important companies, but will let the smaller
ones fend for themselves. (Mattlin, 2007)
10.1.3 The re-organization of the Chinese SOE sector i.e. restructuring,
mergers and closures reduced the number of SOEs from circa 262,000
to 174,000 in 2001. (Special Report: Business in China, The Economist)
10.1.4 Stock market listings were encouraged, more especially, if these could
bring in technology, private sector expertise and discipline. But the
government intends to remain in control.
10.1.5 The founding of the State Assets Supervision and Administration Commission
of the State Council (SASAC) in 2003 under the State Council launched a
process of redefining the relationship between central government and the
so-called ‘central enterprises’ – the key SOEs that have been selected by
the government to form the basis from which China’s future top global
companies will be created.
10.1.6 SASAC at the national level handles the state’s ownership interests as
well as regulation and supervision of central enterprises, while the
Ministry of Finance retains overall responsibility for all state-owned
enterprises as well as the financial matters of non-corporate entities,
such as agencies. SASAC’s mandate does not cover financial organisations.
(Mattlin, BICCS Asia Paper Vol. 4(6))
10.1.7 One hundred and thirty six (136) central enterprises out of a total of
120,000 SOEs fall under SASAC. Central enterprises account for the
bulk of SOE profits (circa 70%, equivalent to 20% of government
revenues) and around a quarter of SOE corporate investment. (Mattlin,
BICCS Asia Paper Vol. 4(6))
10.1.8 The combined value of the assets of central enterprises amounted to
circa 1.2 trillion Euros in 2006. (Mattlin, BICCS Asia Paper Vol. 4(6))
10.1.9 SASACs stated objective is to reduce the number of central enterprise
from 140 to circa 30 to 50 globally competitive companies. Hence, where
13
possible, mergers are encouraged to achieve a scale at which they can
compete globally.
10.2
Norway
10.2.1 State capitalism exists and encouraged in Norway.
10.2.2 “… The State ownership must have a dynamic approach to its
ownership, so that the instruments that are used are at all times
appropriate for the goals behind the State’s ownership. The proportion of
a company that the State should own is linked to the question whether State
ownership is an appropriate instrument for achieving relevant social
objectives and bringing about the growth of the company, as well as the
sector in which it operates and structural considerations…” (p38, Meld.
St.13(2010-2011) Report to the Storting (White Paper) Summary, Active
Ownership)
10.2.3 As a prerequisite clear goals must be established for State’s involvement
10.2.4 The four categories that form the basis for State ownership in the
various companies are viz. (a) companies with commercial objectives
(Category 1); (b) companies with commercial objectives and national
anchoring of their head office functions (Category 2); (c) companies with
commercial and specifically defined objectives (Category 3); and (d)
companies with sectoral policy objectives (Category 4).
10.2.5 In the case of companies with commercial objectives (Category 1), the
State’s objective is commercial profitability, high level of value creation, and
highest possible return on investment over time. The State’s interest may
vary if they would help promote the country’s industrial and commercial
development and safeguard the State’s interest. (p44, Meld. St.13(20102011) Report to the Storting (White Paper) Summary, Active Ownership)
10.2.6 The State’s ownership in Category 2 of companies is motivated by
commercial interests, but with added dimension that national anchoring of the
company’s office in Norway facilitates research, innovation and technological
development. National anchoring is ensured through a shareholding of more
than one third. “… The State’s shareholding in Category 2 shall remain
unchanged, unless it is considered appropriate to adjust the
shareholding in extraordinary circumstances. Examples of such
circumstances may include a merger or a share issue in order to
facilitate international growth through an international acquisition for
example…” (p44, Meld. St.13(2010-2011) Report to the Storting (White
Paper) Summary, Active Ownership)
10.2.7 For companies with commercial and other specifically defined
objectives, the State’s shareholding will remain unchanged. The
shareholding may be considered appropriate to adjust in cases where
ownership is replaced with regulatory measures as an instrument. For
example, this may apply to companies, “… where the aim of the ownership is
to monitor the sustained production of products and services of importance to
national security or to safeguard national sovereignty. The same applies
where the State ownership is to safeguard the national ownership of natural
resources and a desire to correct the failure of the capital markets through
14
contributing to competition, capital, etc. …” (p45, Meld. St.13(2010-2011)
Report to the Storting (White Paper) Summary, Active Ownership)
10.2.8 The State’s shareholding in Category 4 companies primarily has sectoral
objectives.”… The State’s shareholdings in the companies in Category 4
shall remain unchanged, unless it is considered appropriate to adjust
the shareholding in extraordinary circumstances. In practice, such
circumstances will rarely arise…” (p45, Meld. St.13(2010-2011) Report to
the Storting (White Paper) Summary, Active Ownership)
11.
Key Findings
The findings of our empirical exercise could be summarised as follows:
11.1
That despite its limitations, a policy framework for the establishment and
de-establishment of SOEs at national, provincial and local spheres of
government exists. International experience seeks to confirm that a policy
for establishment and de-establishment of SOEs should be derived from the
basis for State’s ownership in the various companies e.g. Norway
11.2
The accounting officer for a public entity that is not listed in either Schedule 2
or 3 must, without delay, notify the National Treasury, in writing, that the
public entity is not listed. However, this does not apply to an unlisted
public entity that is a subsidiary of a public entity, whether the latter is
listed or not.
11.3
Approximately 13 per cent of municipal entities could be classified as service
utilities. On the other hand, private companies and section 21 companies
including trusts accounts for 87 per cent of municipal entities, per type.
This is despite Municipalities having been encouraged to take all the
necessary steps to convert non-compliance structures like section 21
companies, trusts and other forms.
11.4
Twenty eight per cent of municipal entities are concentrated in the
Development and Planning, and underweight in what could be classified
as key service delivery by function. Hence, municipal service delivery
strikes in various parts of SA.
12.
Recommendations
12.1
That the South African government should, as a prerequisite, clearly establish
and articulate its goals for State involvement in the economy.
12.2
That the PFMA should be amended so that the listing of SOE subsidiaries, i.e.
Schedule 2 and 3 SOEs, becomes compulsory.
12.3
Both the MFMA and Municipal Systems Acts should be amended in order to
avert the creation and proliferation of non-compliance structures e.g. section
21 companies, trusts and other forms
15
13.
Reference List
Basu P (2008) Reinventing Public Enterprises and Their Management as the Engine
of Development and Growth in Public Enterprises: Unresolved Challenges and New
Opportunities, United Nations Publication
Department of Public Service and Administration and National Treasury (2002),
Interim Guide for Creating Public Entities at the National Sphere of Government
IMF (1995), Bureaucrats in Business, The Economics and Politics of Government
Ownership
Local Government Municipal Systems Act (Act No. 32 of 2000)
Local Government: Municipal Finance Management Act, Act No. 56, 2003)
Mattlin M (2007) The Chinese Government’s New Approach to Ownership and
Financial Control of Strategic State-Owned Enterprises
Mattlin M, (Updated) BICCS Asia Paper Vol. 4(6))
National Treasury (Updated Version: August 2004) Modernising
Governance, Implementing the Municipal Finance Management Act, 2003
Financial
National Treasury (2010), Updated Municipal Entities Report, information obtained
from Municipalities as at 30 June 2010
Norwegian Ministry of Trade and Industry (2010) Meld. St.13 (2010-2011) Report to
the Storting (White Paper) Summary, Active Ownership) – Norwegian State
ownership in a global economy
Public Finance Management Act (Act No. 1 of 1999)
The Economist (2011) Special Report: Business in China – China’s state-owned
enterprises want to make their mark on the world stage
16