Frontline Africa Advisory

SOE Crisis: Need for Change

SOE Crisis: Need for Change

The recent resignation of Mark Barnes as the Chief Executive Officer (CEO) of the South African Post Offices raises interesting questions about government’s heightened vigilance about State-Owned Enterprise (SOE) governance and strategic direction. The resignation is one among a growing list of recently appointed CEOs of SOEs who have left either due to too much interference by the shareholder (government), or lack of support for reforms/strategic reorientation.

A trend seems to be emerging that government expects SOE executives to toe the line to a point of puppetry. Though understandable, given the looting that has gone on in these institutions, this new forceful posture can be construed as going against President Cyril Ramaphosa’s promise of ensuring that the right people are brought on board to run SOEs and for governance to provide the required support for these individuals. Similarly, it prolongs the high turnover of SOEs which has played a major role in bringing these organisations to their current state of disrepair.

The lack of support for executives at SOEs raises the question; for what are these individuals paid big sums of money for if not to guide and nurse them to a state of functionality and thriving? How does government, in all its political wisdom expect to run these organisations from a distance, when it is currently struggling to manage government departments that are wholly within its ambit to run? For government to expect hired executives to effectively run SOEs and rescue them without backing them to make some painful decisions is akin to letting them enter a boxing ring with their hands tied behind their backs. At the current rate,  those accepting the leadership of these entities will have to live with and accept that their passenger fancies themselves as more skilled at driving than they are. Nothing could be more annoying, as many drivers would surely attest.

Along with Chief Restructuring Officers (CROs), who many view as nannies for CEOs, Public Enterprises Minister Pravin Gordhan told Parliament on the 17th of July 2019 that his Department is working on a Green Paper which will culminate in the drafting of a Bill seeking to strengthen government’s involvement in the running of SOEs. This is likely to be a recipe for even more disaster and could certainly make SOEs undesirable for any person with self-respect and care for their wellbeing and professional reputation.

If the government is sincere about rescuing key SOEs from the quicksand, it will have to accept some short-term pain for long-term gain and will have to fully trust whoever they put in charge and not second guess them. There is no denying the damage that state capture and corruption have brought upon SOEs.

To expect a different result from repeating the actions that have landed us in this situation would be foolish. Government cannot have its cake and eat it. Difficult decisions must be made that have nothing to do with politics but are solely concerned with saving our SOEs and economy that is lying on the operating bed. Whichever surgeon is tasked with performing that vital operation, they need to be equipped with the right tools and support to ensure it is a success.

Written by Pearl Mncube

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