Tag Archive | PRC report

PRC report out on SA’s public service..

Lack of liaison throughout….

The presidential review committee’s (PRC) report on state-owned enterprises (SOEs) is now in the public domain.

The report clearly lays out in writing what has suspected by many for a long time; that in the opinion of the PRC there is major disconnect between government departments in form of liaison over national objectives; a total lack of common  data to work with and that there is a similar disconnect between SOEs and the different tiers of government service – national, provincial and local.

The recommendations precede a Bill which to be tabled by the minster for performance monitoring and evaluation, Collins Chabane, called the State Owned Entities Bill, which will relate to all SOEs, their planning and decision-making processes, as well as their relationships with government departments in general.

All this is to be in an effort to overcome the problems enumerated in the report.

Governance issues

In a statement issued at the time, the minister stated that cabinet had approved the final report at the end of April 2013, the original committee to make such a report, having set this up in 2010 with the objective of auditing all SOE’s to “review the current governance arrangements”.

It was also expected of the process to review government’s development objectives, particularly in so far as the New Growth Plan was concerned and comment on possible improvements in SOE contributions.

Auditing 700 units

The committee was given 21 terms of reference covered in the general topics of development and transformation; governance and ownership; their business viability and their strategic management and operational effectiveness. A total of 715 SOE units were listed for audit.

“Crucial weaknesses within SOEs were that whilst SOEs have an indispensable role to play in service delivery and also have crucial performance and transformation potential, there are grave impediments to their optimum contribution”, the minister said.  It is now proposed to set a SOE inter-ministerial committee to guide implementation of the recommendations.

One of the crucial issues to emerge from the report was whether SOEs were responding to the South Africa’s developmental agenda and assisting in a meaningful way towards the need for government departments to deliver. The report also recommends, aside from the fact that government should enact a single overarching law (State Owned Entities Act), it should also establish a central remuneration authority (CRA).

Mixed objectives

It was clearly established that there are “no commonly agreed strategic sectors and priorities across the three spheres of government as well as a common database on the SOEs.”  “There are also challenges”, the report says, “and an endemic tension with balancing the trade-offs between commercial and non-commercial objectives of SOEs including the funding those mandates and as well capitalisation model for the SOEs.”

After enunciating on eight pages of reforms needed, the PRC report concludes that “government must ensure the requisite capacities to implement these SOEs reforms are in place, including visioning and strategy-setting, appropriate human capital and structures, as well as an effective electronic oversight systems to enabling monitoring and evaluation of SOEs.”

It calls for the establishment of an SOE Council of Ministers to drive implementation of the recommendations of the PRC to achieve effective state oversight  by cluster grouping but specifically states that any “commercial” SOE should be overseen by two distinct cluster authorities.

Thirty one specific issues that need immediate attention are identified and certain “critical challenges” isolated, which included “an endemic tension with balancing the trade-offs between commercial and non-commercial objectives of SOEs including the funding those mandates and as well capitalisation model for the SOEs.”

Tiers disconnected

It also noted that there were “no commonly agreed strategic sectors and priorities across the three spheres of government.”

The authors had studied similar structures in New Zealand, Canada and Sweden “where SOE reforms have proved to be reasonably successful. They were amongst the first to focus on formulating a clear overarching legislative framework for SOEs and setting out objective for the management of SOEs”, the PRC reports says.

“In many SOEs”, the report concludes, “there is a current need for massive injection of capital and the finance policies of many SOEs require close re-examination. Ownership policy and funding models for social and economic development mandates of SOEs are in some instances are blurred and bewildering, at times leading to undercapitalisation; a factor which completely impedes the SOE’s ability to meeting national challenges it has been set.”

Refer previous articles in this category
http://parlyreportsa.co.za//cabinetpresidential/presidential-review-committee-calls-for-overhaul-of-soes/
http://parlyreportsa.co.za//cabinetpresidential/public-enterprises-reports-on-a-rocky-and-controversial-year/

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