LETTER: Mixed ownership for SOEs would solve many problems
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SA’s state-owned enterprises (SOEs) face big challenges that demand urgent solutions. We have seen SAA go into business rescue, and now Denel is struggling to meet its financial obligations, not forgetting that it recently posted huge losses.
Another worrying factor is that some of the main SOEs under the department of public enterprises are not performing at the optimal level required for them to be efficient and profitable, and this puts a strain on government finances.
The business model of the state owning 100% of these entities is not working. In various parts of the world we’ve seen mixed ownership spreading. Saudi Arabia and China are reportedly adopting this model. According to my observation in SA, we have isolated cases of this model being used, such as that of Telkom.
It has been reported that the department of public enterprises is looking for an equity partner to buy a stake in SAA. The question remains why, as part of the reforms of our SOEs, we don’t adopt this mixed ownership model more widely.
One of the main motivations for the mixed ownership model is private sector investment, so the SOEs are not solely reliant on state funds. Private equity partners would also improve management and expose the SOEs to market discipline.
Nyaniso Qwesha
Via e-mail
JOIN THE DISCUSSION: Send us an e-mail with your comments. Letters of more than 300 words will be edited for length. Send your letter by e-mail to letters@businesslive.co.za (mailto:letters@businesslive.co.za). Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Another worrying factor is that some of the main SOEs under the department of public enterprises are not performing at the optimal level required for them to be efficient and profitable, and this puts a strain on government finances.
The business model of the state owning 100% of these entities is not working. In various parts of the world we’ve seen mixed ownership spreading. Saudi Arabia and China are reportedly adopting this model. According to my observation in SA, we have isolated cases of this model being used, such as that of Telkom.
It has been reported that the department of public enterprises is looking for an equity partner to buy a stake in SAA. The question remains why, as part of the reforms of our SOEs, we don’t adopt this mixed ownership model more widely.
One of the main motivations for the mixed ownership model is private sector investment, so the SOEs are not solely reliant on state funds. Private equity partners would also improve management and expose the SOEs to market discipline.
Nyaniso Qwesha
Via e-mail
JOIN THE DISCUSSION: Send us an e-mail with your comments. Letters of more than 300 words will be edited for length. Send your letter by e-mail to letters@businesslive.co.za (mailto:letters@businesslive.co.za). Anonymous correspondence will not be published. Writers should include a daytime telephone number.
