Renewing Governance: The role of transparency and accountability in SOE reform amidst shifting polit

Article first published in Polity 3 June 2024

Yugen Pillay is head of public sector assurance at BDO South Africa.

In the quest for a profound transformation in South Africa's state-owned enterprises (SOEs), the spotlight must be directed towards transparency and accountability as keystones for change. But how? One answer may lie with the introduction of coalition politics into the country's governance framework, which could herald a shift towards a culture that prioritises consequence management.

Barely a week passes nowadays without a story regarding the state of energy and logistics security, the lifelines of a growing economy. So, when suggestions such as the proposal to use prescribed assets — which means pension funds — to assist these ailing SOEs, eyebrows raise. Which is more than fair. Would any prudent investor willingly pour their hard-earned money into entities plagued by mismanagement and corruption?

So what needs to shift?
To enact meaningful change, we must address the root of the problem: a lack of accountability. Corruption, as revealed countless times in the findings of the Zondo Commission, has thrived due to the absence of consequence management. Take SOE’s audit reports as further proof. The presence of numerous contracts awarded ‘irregularly’, points to the urgent need for reform. Such irregular and wasteful expenditure signal mismanagement or corruption, both of which have plagued these entities for years.

If we seriously want to consider using prescribed assets or even drawing further on the National Treasury, it must be within a framework of robust public-private partnerships (PPPs). The private sector's involvement here, with greater controls in place and oversight, offers a promising solution. With clear accountability, efficient spending and qualified leadership, PPPs present a real route toward helping revitalise SOEs while minimising wasteful expenditure.

For this model to succeed, though, government interference would need to be strictly prohibited to ensure operational autonomy. But this presents a challenge, as it implies the government is unable to manage these operations themselves. Which is why we find ourselves in this situation, where instead of addressing the roots of the problem, the government instead looks to solutions such as ‘prescribed assets’ where, as citizens, we won’t even be able to have a say in how our money is invested to continue enabling inefficiency.

SOEs represent just the tip of the iceberg in this regard. Healthcare is at a crossroads with NHI on the cards despite medical graduates stuck without jobs. Our policing faces serious resource issues too, as crime rates soar. And, as I’ve mentioned already, infrastructure continues to deteriorate in the face of poor maintenance — evidenced in the recent water cuts facing Joburg residents.

Adequate funding is essential to address these pressing issues. Yet, without a cultural shift within the government, mere economic growth won't suffice. Accountability and transparency must become ingrained values.

Which is why I believe there’s a small cause for hope. As we approach elections, the possibility of a fragmented political landscape presents an opportunity for change. The potential loss of the ANC majority may compel the incumbent party to reassess its governance culture. A newfound focus on citizen needs and efficient resource allocation could catalyse the transformation we so desperately require. 

Rebuilding trust in SOEs hinges on effective consequence management. Through PPPs and stringent oversight, we can instil accountability and pave the way for sustainable growth. Coupled with a shift in governmental culture, this approach offers a path forward towards a brighter future for South Africa. It's time to act decisively and prioritise the long-term wellbeing and prosperity of our nation.