Public Enterprises Committee Legacy Report

NCOP Public Enterprises and Communication

10 July 2019
Chairperson: Mr I Ntsube (ANC, Free State)
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Meeting Summary

The Committee met to receive a briefing from its Content Advisor on the Legacy Report of the previous Committee.

The Content Advisor, in briefing, highlighted challenges stemming from the previous Parliament that the Committee was expected to deal with. The Committee needed to look into the inadequate funding for state-owned companies (SOCs), managerial issues where board members have been failing to fulfill their fiduciary and other attendant challenges stemming from the third and fourth Parliament. The Committee had to also deal with the poor attendance of Ministers to Committee meetings as well as the lack of empowerment of Members through international study tours. He recommended that there be serious and urgent engagement with the relevant departments in resolving these matters. There should be meaningful changes on the part of departments to ensure efficient service delivery and that new staff members actually familiarise themselves with the issues at hand. It was highlighted that the previous Committee, as part of its oversight exercise, visited companies such as Denel to see if projects being undertaken by these entities stood to benefit communities. During their tours, Members found that Denel was training young scientists, and the Committee went on to advise the entity to reach out to all provinces in their projects and not just focus on Gauteng. In the case of Transnet, the entity was implementing a market demand strategy in an effort to expand its capacity. South African Airways (SAA) has a lot of financial challenges but it was hoped the turnaround strategy currently being implemented would lift the airline to profitability. South African Express was also facing financial difficulties and have to address its challenges so that it could report on unqualified audit reports going forward. In the case of Medupi, the power station has been dealing with worker and stakeholder strikes due to unhappiness with the BBEE component of the construction of the power station. Challenges faced by Members of the previous Committee during these visits include logistical difficulties associated with traveling to these entities as well as the reluctance of senior executives and board members of these state-owned companies (SOCs) in divulging accurate and detailed information on obtaining realities.

The outstanding matters from the Fifth Parliament under the Department of Communications include the completion of the implementation of the Digital Migration Project and the reduction of the costs to communities as well as making broadband accessible and available to underserviced areas. Under the Department of Public Enterprises, the outstanding matters were the completion of the implementation of the Deed of Settlement between Alexkor and the Richtersveld Community, resolving land claims between the South African Forestry Company (SAFCOL) and relevant communities and the monitoring of the implementation of SOCs’ turnaround strategies.

Members found it disturbing that government officials could withhold information from Members, and suggested that this be flagged. There would be need for the Committee to revisit the SOCs identified to have had behaved that way. They suggested that the Content Advisor give a preliminary overview before departments appear before Committee. Members would not want departments to come in and brief them on issues they were not well informed on. On SAA, the airline has always had this habit of missing the deadline for submissions. They suggested that the Committee look into that kind of behavior. The non-attendance of Committee meetings by Ministers was a very big issue as it affects accountability. Not having engagements with the Ministers is problematic as it would negatively affect the Committee’s work. 

Meeting report

The Chairperson welcomed everyone and opened the floor for the Content Advisor to take the Committee through the previous Committee’s Legacy Report.

Mr Eric Boskati, Committee Content Advisor, in briefing, highlighted challenges stemming from the previous Parliament that the Committee was expected to deal with. The Committee needed to look into the inadequate funding for state-owned companies (SOCs), managerial issues where board members have been failing to fulfill their fiduciary and other attendant challenges stemming from the third and fourth Parliament. The Committee had to also deal with the poor attendance of Ministers to Committee meetings as well as the lack of empowerment of Members through international study tours. He recommended that there be serious and urgent engagement with the relevant departments in resolving these matters. There should be meaningful changes on the part of departments to ensure efficient service delivery and that new staff members actually familiarize themselves with the issues at hand.

Department of Public Enterprises

The mandate and strategic objectives of the Department were to drive investment, productivity and transformation in the SOCs and in doing this, drive industrialisation by creating jobs and developing skills. The main aim of the Department as noted above, was to achieve the Government’s strategic objectives as outlined in the National Development Plan, New Growth Path and the Industrial Policy Action Plan.

The Department is comprised of entities such as Alexkor, which is involved in land and alluvial diamond mining, Denel, an arms manufacturing company, Eskom, in charge of generating, transmitting and distributing electricity, Safcol, SAA, SAX and Transnet. It was important that the Department conducts some sort of oversight over these entities, and there had to be way in which the Minister is consulted. He acknowledged that because there were instances in the past where CEOs and boards have not seen eye to eye, there was a need for an overarching facility that provides guidelines. The need for this overarching regulation had been raised before but was still yet to be executed. Members had to understand the importance of the need for legislation in order for parliamentary oversight on Department to be effective.

Department of Communications

Mr Boskati said the Department of Communications sought to create space in the ICT sector which would accommodate and give access to reliable and affordable ICT services in order to advance the socio-economic development goals and support the African agenda. The objectives of this Department included developing ICT policies and legislation that creates conditions that encourage accelerated and shared growth of the South African economy and impacts the wellbeing of citizens positively.

The entities within the Department of Communications include the Independent Communications Authority of South Africa (ICASA), South African Broadcasting Corporation (SABC), National Electronic Media Institute of South Africa (NEMISA), Media Development and Diversity Agency (MDDA), Brand South Africa and the Films and Publication Board. Entities such as Brand South Africa were there to improve the image of South Africa and make it investable. Brand South Africa was important in that it deals with the negative images that are created so that the outside world could still invest in South Africa.

Legislation processed by the previous Committee

Mr Boskati said the previous Committee’s legislation load used to be larger but some departments had ceased to exist which has made the legislation needed, less. Processed legislation include the Indigenous Knowledge Systems Bill which protects indigenous knowledge of communities, and encourages the opening of a trust for the community. The objective of the Bill was to make sure that the community which owns the knowledge, benefits. The Films and Publications Bill which deals with matters such as the definition of hate speech and regulates sex offences on television as well as the Repeal of the Overvaal Resorts Limited Bill. The Committee would get an update on this from the Department soon. However, there were emerging challenges such as time constraints and lack of informative meetings - specific Bills referred to the Committee had to be processed within a short space of time and there was need for Parliamentary Legal Advisors to attend Committee meetings as a means of enhancing the work of the Committee to ensure legally-informed outcomes.

Oversight visits

Mr Boskati highlighted that the previous Committee, as part of its oversight exercise, visited companies such as Denel to see if projects being undertaken by these entities stood to benefit communities. During their tours, Members found that Denel was training young scientists, and the Committee went on to advise the entity to reach out to all provinces in their projects and not just focus on Gauteng. In the case of Transnet, the entity was implementing a market demand strategy in an effort to expand its capacity. South African Airways (SAA) has a lot of financial challenges but it was hoped the turnaround strategy currently being implemented would lift the airline to profitability. South African Express was also facing financial difficulties and have to address its challenges so that it could report on unqualified audit reports going forward. In the case of Medupi, the power station has been dealing with worker and stakeholder strikes due to unhappiness with the BBEE component of the construction of the power station. Challenges faced by Members of the previous Committee during these visits include logistical difficulties associated with traveling to these entities as well as the reluctance of senior executives and board members of these state-owned companies (SOCs) in divulging accurate and detailed information on obtaining realities.

The outstanding issues from the Fifth Parliament under the Department of Communication include the completion of the implementation of the Digital Migration Project and the reduction of the costs to communities as well as making broadband accessible and available to underserviced areas. Under the Department of Public Enterprises, the outstanding matters were the completion of the implementation of the Deed of Settlement between Alexkor and the Richtersveld Community, resolving land claims between the South African Forestry Company (SAFCOL) and relevant communities and the monitoring of the implementation of SOCs’ turnaround strategies.

Discussion

The Chairperson thanked Mr Boskati for the briefing and invited comments and inputs from Members. 

Mr M Nhanha (DA, Eastern Cape) found it disturbing that government officials could withhold information from Members, and suggested that this issue be flagged. There would be need for the Committee to revisit the SOCs identified to have had behaved that way. He suggested that the Content Advisor give a preliminary overview before departments appear before Committee. Members would not want departments to come in and brief them on issues they were not well informed on. On SAA, the airline has always had this habit of missing the deadline for submissions. He strongly suggested that the Committee look into that kind of behavior. The issues in Alexkor were very important and have serious implications for the entity and the community. There were people mining diamonds in that part of the country and these minerals were being taken to Johannesburg with lack of accountability. The Alexkor CEO at the time could not account to Parliament as to the value of diamonds that are extracted in that area. He urged the Committee to push for the resolution of the matter. When two sections of the community are fighting, it is the government’s role to provide an amicable solution. There has to be some political will on the part of government and politicians to ease the situation in the best way possible.

Mr A Nyambi (ANC, Mpumalanga) said the presentation had created impressions that were not entirely accurate. What was decided during the fifth term of Parliament was that not a single person would be deprived of an opportunity to travel on study tours. He referred to slide three of the presentation, and took issue with the third bullet dealing with managerial issues. It created an impression that Members would always have a challenge with the boards but the reality is the problem was not always with the board. There were entities with efficient boards but that would have member of the Executive making the job difficult for them. He encourages that these reports be looked at in a very objective way. Further, Mr Boskati, in giving an overview on entities, should have highlighted the reconfigurations, such as that Brand South Africa was no longer under the Department of Communication. It would have been fair to highlight this information.

Mr A Arnolds (EFF, Western Cape) appreciated the presentation and raised concerns as a new Member sitting with issues coming from the Third and Fourth Parliament. The non-attendance of Committee meetings by Ministers was a very big issue as it affects accountability. Not having engagements with the Ministers is problematic as it would negatively affect the Committee’s work. 

Ms C Labuschagne (DA, Western Cape) said, although minutes were taken for meetings, there needed to be a more defined and organised structure to make it clear what matters still need to be pursued and prioritised and which issues had already been attended to so they could be scratched out from the Committee’s priorities list.

Mr Nyambi pointed out that the Committee had to carry out its oversight function on two different sectors, and these sectors needed to work together because they are essentially one.

Mr Boskati replied and agreed with the proposal to make a priority list on the Committee agenda. There used to be a system where all SOCs would be called in and analysts would come and give their views and opinions. He had tried to push for this same system in the previous years as it was funded by the departments but it was discontinued and he was not entirely sure why. He suggested a system where all the entities would come in and explain their mandates and priorities – this would make for an efficient tracking mechanism.

The Chairperson appreciated the inputs from Members and the Content Advisor. He added that invites for Committee meetings should be put out on time to enable Members to contribute adequately during meetings. Follow-ups would be made on all the concerns and comments raised by Members.  

The meeting was adjourned.

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