No solution for Telkom in parastatal report

What to do with over 700 companies owned or part owned by the state, which are failing to deliver on everything from service delivery to employment equality and are hotbeds for corruption, nepotism and the kinds of tender deals that makes the country hang its collective head in shame? That’s the question the South African government asked back in 2010, when a Presidential Review Committee was established to investigate the many parastatals that operate in government branches.

Today, that committee has reported back and their findings released – and some of them are quite damning. For example:

… many SOEs currently need a massive injection of capital and finance policies require close re – examination. Ownership policy and funding models for social and economic development mandates of SOEs are in some instances blurred and bewildering, at times leading to undercapitalisation, which impedes the SOE’s ability to meeting national challenges.

“Blurred and bewildering”? Not the kind of language one usually finds in these things.

The review committee estimated that it would find 300 SOE (state-owned entities), but instead stumbled upon 715 government-run companies. Such a staggering discrepancy was clearly a bit astonishing, so many of the report’s recommendations revolve around the need for combining multiple SOEs into single entities and making them more accountable to government.


Our interest in SOEs is predominantly what happens to Telkom, the telecoms incumbent under whose auspices South African broadband infrastructure has remained among the worst in the world. Even though it is partly privatised, having listed on the Johannesburg Stock Exchange in 2003, Telkom’s future and decision making apparatus are closely tied to the Department of Communications. Amusingly, under the reasons for government involvement in a company, Telkom appears not in the list for ‘natural monopoly’ or ‘social and development goals’, but the reason for state interference is ‘unknown’.

Those who believe full privatisation is the solution to Telkom’s woes – and that doesn’t necessarily include us at htxt – and a full sell off of its assets won’t find any solace in this report, however. The report doesn’t address the needs of individual organisations, and confusingly recommends both greater private investment in the public sector at the same time as recommending greater government control.

While the 222-page report is fairly interesting reading, and draws interesting parallels with countries as diverse as Singapore and Kenya, it is a bit glib in some of its recommendations. Its main recommendations are:

…the separation of roles by Government; the formulation of a strategy for SOEs; creation of an enabling environment; and ensuring adequate performance evaluation and monitoring of SOEs.

To which most people would reply, “well yes”. Wouldn’t they?

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