State-Owned Enterprises in Africa: Department briefing

Meeting report

LABOUR AND PUBLIC ENTERPRISES SELECT COMMITTEE
3 August 2005
State-owned enterprises in Africa: department briefing

Chairperson: Ms M Themba (ANC)

Documents handed out:
Department briefing: State-owned Enterprises’ Role and Investments in Africa

SUMMARY
The Department of Public Enterprises briefed the Committee on the role of South African State-owned Enterprises (SOEs) in Africa and stressed the importance of investment in infrastructure. Officials emphasised that the African Infrastructure Development Programme was still a work in progress, and outlined the Department’s objectives and activities of Eskom, Transnet, SA Airways, Arivia.kom and Denel.

MINUTES

Department briefing
Mr B Gasa, Department Chief Director of Africa Projects, stressed that the African Infrastructure Project was a ‘work in progress’. He predicted that Members might have questions that he would be unable to answer while the project was in its planning phase, but such questions could be answered in due course.

Two of the main objectives of the New Partnership for Africa’s Development (NEPAD) were economic growth and poverty reduction, but poor infrastructure was a critical barrier. If the stock of physical infrastructure were increased by one percent, gross domestic product would be increased by the same margin.

The African Infrastructure Project was aimed at providing guidelines to SOEs. The Department was currently involved in the updating of data contained in ‘Africa First’, a document published in 2003 on the activities of SOEs in Africa. Government should be the driving force, and the Project was aimed at co-ordinating the activities of the SOEs in order to maximise the developmental impact of their investments.

Discussion
The Chairperson expressed regret that Mr Gasa was the only representative from the Department. She requested that at the next briefing, other stakeholders should also be present in order to provide a better clarity on participants. Regarding the Denel Centre of Learning, she was interested in knowing how women were represented.

Mr Gasa replied that although the Department had made figures available, these had not been broken down into gender categories. He would find the relevant information and reply at a later stage.

Ms N Ntwanambi (ANC) proposed that since Mr Gasa was primarily involved in strategy and policy, the SOEs should have ideally been present to answer questions. For ‘historical reasons’, the Southern African Development Community (SADC) should be the focal area. Mr Gaza responded that while South Africa would not ignore requests from other countries, it would focus on SADC.

Regarding the transport network, Ms Ntwanambi noted that there had always been a railway between South Africa and its neighbouring countries. She requested information regarding Portnet, specifically regarding South Africa’s relations with Namibia and Mozambique. Were their ports as capacitated as Durban’s? What would the capacity relations be if Cape Town and Walvis Bay were linked? Mr Gasa responded that negotiations were currently underway for a railway line to Maputo.

Ms Ntwanambi asked what the Department would do to make SOEs contribute to job creation in other African countries. How would the Department ensure that once the SOEs left those countries, that development would be sustained?

Mr Sibiya enquired whether there were guiding policies to govern the SOEs’ operations, especially regarding their Terms of Agreement with local service providers regarding developmental impact. Mr Gasa responded that a socio-economic booklet regarding the contributions of SOEs was being compiled. He could only report on what the SOEs had reported to the Department.

Ms Ntwanambi (ANC) asked whether South Africa’s 49% stake in the Air Tanzania Company Limited (ATCL) meant that South Africa had also benefited from ATCL’s agreements with other airlines. How had the recent SAA strike affected partnerships?

Ms J F Terblanche (DA) wanted to know whether government’s support of SAA could still be justified in the light of globalisation, the Competition Board’s recent verdict against the airline, as well as the recent strike and the ensuing losses.

Mr Gaza responded that the government viewed SAA as a strategic asset. Like other SOEs, it would continue to receive capital injections, even though these would be limited. The Department viewed the strike as a labour and managerial issue and had clear instructions not to get involved. As for losses suffered due to the strike, SAA had chosen not to quantify losses publicly.

Ms J Terblanche (DA) and Mr D Mkono (ANC) were interested in why South Africa had chosen to consult with a company in the United Kingdom or if there was no expertise locally. Mr Gasa responded that if there had been local expertise the Department, they would not have gone with an international company. Mckinsey’s was well known globally and had had great success with facilitating turn-around strategies for Airlines such as Air France. SAA was already reaping the benefits of having consulted with this company.

Mr J Sibiya (ANC) asked what the Department was doing to inform countries outside of Africa of the activities of its SOEs to prevent untrue, negative perceptions of South Africa. Africa was divided into economic blocks. He asked what these countries would contribute to the development of the continent.

Mr Gasa said that these questions would best be answered by his political counterparts since he was not qualified politically or otherwise to do so.

The meeting was adjourned.