Denel, along with other embattled State-owned enterprises (SOEs), will at some future stage report to a State-owned holding company after what South African President Cyril Ramaphosa calls “a dedicated SOE reform unit” lays the groundwork.
The developments affecting SOEs – previously under the stewardship of now retired Minister of Public Enterprises Pravin Gordhan – were made public by Ramaphosa in The Presidency budget vote debate during a joint sitting of the National Assembly (NA) and the National Council of Provinces (NCOP). The sitting, a Parliamentary Communication Service statement has it, was in “a makeshift chamber located at the Nieumeester parking lot” opposite the Houses of Parliament, unusable since 2 January 2022 after an apparent act of arson.
Elaborating on what he briefly mentioned in his opening of Parliament address, Ramaphosa indicated legislation to establish a State-owned holding company to oversee and co-ordinate key strategic SOEs is in the pipeline. He did not name any SOEs, with observers interpreting this as including those on the receiving end of serial National Treasury (NT) bail-outs such as Denel, Eskom and SAA (SA Airways). The new legislation will assign functions to the holding company. These will cover governance, financial management, remuneration standards and similar matters, the South African President said.
Responsibility for the SOE work is assigned to Minister in The Presidency tasked with planning, monitoring and evaluation, Maropene Ramokgopa. Going by what Ramaphosa said in his budget vote response, the still-to-be formed SOE reform unit with “appropriate expertise” will be the lead agency in making the SOE holding company reality.
SOEs previously in the now defunct Department of Public Enterprises (DPE) will, Ramaphosa told public representatives, “report to their respective line departments in terms of policy and regulatory matters”. In Denel’s case the obvious ministry would be Angie Motshekga’s defence and military veterans with the Department of Trade, Industry and Competition (DTIC) also seen as a possible by some in the defence industry.
In one of his final acts as DPE Minister, Gordhan named a new Denel interim board of directors on 9 May ahead of elections for the NA, NCOP and nine provincial legislatures.
It is headed by Monhla Hlahla as chair, who makes a return to the Centurion headquartered defence and security conglomerate. Other directors are Cheryl Carolus, Zoli Kunene, Thami Magazi, Professor Tshilidzi Marwala, retired general TT Matanzima, Martin Mnisi, Sue Rabkin, Talib Sadiq, Gloria Serobe, Dr Sibusiso Sibisi and Nonzukiso Siyotula.
The DPE May announcement had five priorities for the new interim board. They are to restore sound corporate governance; review the effectiveness of the management team; review major contracts; review the company’s financial position with a view to sustainability, and consult stakeholders.
