ABSIP CALLS ON GOVT TO IMPROVE EFFICIENCY AND BUILD A LONG-TERM SUSTAINABLE STRATEGY FOR SOE’s

ABSIP CALLS ON GOVT TO IMPROVE EFFICIENCY AND BUILD A LONG-TERM SUSTAINABLE STRATEGY FOR SOEs

JOHANNESBURG, June 6, 2019 – The Association of Black Securities and Investment Professionals (ABSIP) has praised President Cyril Ramaphosa’s meeting with leaders of 20 state-owned enterprises (SOEs) and hoped their get-together was the first of many to help tackle the alleged poor governance, mismanagement, incompetence, corruption and reported looting.

ABSIP said it was happy that President Ramaphosa and his cabinet have recognised that state-owned entities had “considerable resources and capabilities that, if better coordinated and managed, could have a far greater impact on economic growth and job creation.”

“As their balance sheets continue to shrink and their liquidity positions deteriorate, the meeting was timely,” said Sibongiseni Mbatha, President of ABSIP.

The State President met with executives from the Central Energy Fund, Denel, Eskom, Industrial Development Corporation, PetroSA, the Passenger Rail Agency of South Africa, SAA and the SABC and others.

“We recognise that the meeting came a few days after the resignation of the CEO of SAA, Vuyani Jarana, who cited, amongst others, lack of support, confusion in the reporting line and uncertainty around the funding for SAA’s turnaround strategy. His resignation came two weeks after Phakamani Hadebe threw in the towel at Eskom. Not long ago, the former CEO of IDC, Geoffrey Qhena, resigned before the end of his term” said Mbatha.

“The bigger challenge is figuring out what needs to happen for the business models of SOEs to work. That requires leadership that takes any enterprise beyond its business model and drives it forward, asking the tough questions and figuring out both problems and solutions,” said Mbatha.

“Also, countering the spread of the cancer of corruption ought to be a national priority that is taken far more seriously than is at present. Corruption not only destroys the moral fibre of society, we remain an underdeveloped country because of it”

“The government should close loopholes in the operation of public enterprises and impose strict financial discipline and governance procedures. This begins with appointing suitably qualified and experienced leadership teams (executive management and competent boards) to improve efficiency and build a long-term operational and financially sustainable strategy.

“The shareholder representatives (ministers) must also pass the governance and oversight test. Where an enterprise is not doing well, there is justification for both the shareholder representative and the boards to monitor even more closely, but this must never translate to micro-management.

“When the entity is doing well, management must be given room to continue running the SOEs without interference,” said Mbatha.

“We call on President Ramaphosa to convene a meeting of professional formations to work on solutions to improve the running of SOEs. It is crucial that SOEs be governed and supported better, operate effectively and efficiently, are developmental, make a profit or at least break even and retain the best available talent”, concludes Mbatha.

ABSIP has become widely recognised as an influential force in the transformation of the Financial Sector as evidenced by its participation in drafting the landmark Financial Sector Charter.

The organisation’s membership includes sub-sectors such as Asset Management, Corporate Banking, Corporate Finance, Corporate Managerial and Financial Consulting, Employee Benefits, Insurance, Investment Banking, Retail Banking, Private Banking, Private Equity, Stockbroking, Treasury and Development Finance Institutions.

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