Your Excellency and our esteemed BRICS SOE Forum Chairperson, Minister Shri Anat Geete, Indian Minister of Heavy Industry and Public Enterprises,
Your Excellency, Mr Peng Huagang, Deputy Secretary General of Chinese State-owned Assets Supervision and Administration Commission of the State Council,
Mr Mogokare Richard Seleke, Director-General, South African Department of Public Enterprises
Ms Oksan Milovanova, Deputy Head of Corporate Technologies Administration – Head of Division, Russian Federal Agency for State Property Management
Senior Officials from our respective Governments
Executives from the State-Owned Enterprises,
Ladies and Gentlemen,
Many thanks go to the Government of India and the Minister of Heavy Industry and Public Enterprises for the warm hospitality received during this visit to this beautiful country.
On behalf of the South African Government and my delegation, I would like to convey my sincere appreciation to you for hosting the first inaugural BRICS SOE Forum on Reform and Governance. I believe these engagements set the ground for a new discourse of SOE Oversight and Management among the BRICS counties.
BRICS SOE FORUM ON REFORM AND GOVERNANCE
This Forum is in line with the objectives of BRICS and provides a critical platform for us as government ministries responsible for departments and entities of the BRICS countries to share our reform and governance practices, identify challenges facing performance and to enhance competitiveness.
I believe that this BRICS SOE Forum would affirm the central role played by SOEs as instruments of socio-economic advancement to implement targeted interventions that accelerate economic growth, skills development, create new employment opportunities, improve infrastructure, improve access to basic services and reduce poverty. Also, this Forum ought to develop, going forward, a BRICS best practice framework, appropriate to our economies.
I believe that is in line with the outcome of the eThekwini Declaration of the Fifth BRICS Summit and subsequent Summits which mentioned: “We acknowledge the important role that State Owned Companies (SOCs) play in the economy and encourage our SOCs to explore ways of cooperation, exchange of information and best practices”.
GLOBAL AND BRICS ECONOMIC OUTLOOK
Ladies and Gentlemen,
BRICS has emerged as a central economic and political alliance for South Africa to drive its economic development and that of the African continent. The current global economic context is making our strategic alliance even more important to pursue the reform of state owned companies that will promote the advancement of the developing world which is central to the facilitation of market access.
We have entered an era where countries are restructuring and reviewing the role of SOEs to respond to economic growth and development challenges, and diversify the revenue streams to strengthen their economies.
The South African Government is committed to ensuring that the budget deficit targets are met, and debt stabilises as a share of GDP over the medium term. This forms part of our approach to fiscal consolidation and the protection of services to our citizens with the intent to yield efficiencies across institutions and agencies within our economy.
To achieve our Government’s objectives of fiscal consolidation, we have implemented a combination of a tight expenditure ceiling and a fairly large tax increase in 2016/17 to narrow the deficit significantly. Continued revenue growth and strict adherence to the planned expenditure ceiling are projected to result in gross debt stabilising at 46.2 percent of GDP in 2017/18.
Our National Development Plan (NDP) contains key interventions that are intended to respond to the structural challenges that have characterised our domestic economy. Most recently, our Government adopted a Nine Point Plan, which intends to accelerate the implementation of interventions contained in the National Development Plan, critical for the turnaround of our economy. These interventions are intended to accelerate economic growth and ensure that we adequately respond to our developmental challenges.
In this regard, the strategic use of the combined capital expenditure programmes of State Owned Companies such as Transnet and Eskom within my portfolio as the Minister of Public Enterprises to drive infrastructure development is crucial. The investment plans of Eskom and Transnet are intended to address existing infrastructure capacity constraints and to create a solid foundation for increased private sector investment to expand productive capacity. We believe that this will enable the South African economy to achieve a substantially higher and sustainable pace of economic growth over the medium to long term. A deliberate private sector partnership framework is therefore essential.
GOVERNMENT AS A SHAREHOLDER
The current state of our economy demands that we implement a wide range of interventions to ensure that we shift the economy to a different growth trajectory with better developmental outcomes. As I mentioned earlier, at the centre of this is the industrialisation of the South African economy supported by an infrastructure development programme.
Our Government have endorsed the Report and recommendations of the Presidential Review Committee on SOEs and is on the path of developing a clear policy that defines the role of state owned companies in the economy. This will culminate in the development of legislation and provide clarity on the continued State ownership in crucial sectors of the economy through codified shareholder function.
As part of the BRICS countries, I look forward to different forms and structures of shareholder oversight, the institutional arrangements and funding and financing arrangements that encourages private sector participation that contribute to sustainable SOEs in order to accelerate economic growth and transformation.
I look forward to the ensuing discussions.
I thank you.
Issued by GCIS on behalf of the Ministry of Public Enterprises