Presiden(al SOE Review Commi5ee (PRC) SEPTEMBER 2011

Transcription

1 Presiden(al SOE Review Commi5ee (PRC) SEPTEMBER 2011

2 AGENDA 1. Establishment of the PRC 2. Process Summary 3. Preliminary Observations 4. Review Framework & ToR 5. Progress Update 6. Participation Platforms 2

3 Review Of State Owned Entities THE ROLE OF STATE- OWNED ENTITIES AND THE DEVELOPMENT FINANCE INSTITUTIONS WILL ALSO BE CRUCIAL TO ACHIEVE THE NEW GROWTH PATH GOALS. THE INSTITUTIONS WILL NEED TO OPERATE DIFFERENTLY AND MORE EFFECTIVELY PRESIDENT ZUMA JANUARY 8 STATEMENT

4 1. Establishment of the PRC

5 INTRODUCTION & BACKGROUND q President Zuma announced the establishment of The Presiden(al SOE Review Commi5ee on the 12 May 2010 during his budget vote q The PRC is a 12 Person Commi5ee q The commi5ee is supported by a limited secretariat q A Steering Commi5ee which comprises of the PRC Chairperson and Vice Chair, Minister of DPME, and Legal Adviser to the President and the DG in the Presidency serves as the Steering Commi5ee of the PRC q The seat of the PRC is at the CSIR Pretoria 5

6 PRC COMMITTEE MEMBERS Ms Mangwashi Victoria Phiyega (Chairperson) Mr Glen Mashinini (Deputy Chairperson) Dr Simo Lushaba Mr Deon Crafford Ms Swazi Tshabalala Ms Dawn Marole Mr Pramod Mohanlal Ms Gugu Ngcobo Professor Mbulelo Mzamane Dr Oupa Monamodi Mr Teddy Daka Ms Nombulelo Mkhumane 6

7 Principles guiding the review q Requested to review State Owned Entities : commercial Entities, agencies, regulators and other relevant forms q The review is not a detailed micro audit of individual SOE s and sectors, but a macro examination of the government owned entities q This is not a Greenfields initiative - numerous reviews were and are undertaken by various stakeholders we seek to engage the existing knowledge q Reviews are not unique to South Africa many other country s have undertaken similar exercises such shall inform the review process q There are existing benchmarks both internal and external to the country q The review shall leverage that which exists already whilst seeking identify gaps and fresh opportunities 7

8 2. Process Summary

9 PRC TIMELINES q An overall period of 21- months is determined for the project. The period is dedicated as follows : o 3 months set up period o 12 months for the actual review o 6 months for the wrap- up and finalisa(on of the report q Repor(ng o End July an internal progress report report to be submi5ed o Quarterly administrative updates o Final PRC Report end March

10 SOE REVIEW CONTEXT: The role of SOEs in a Developmental State If we could not first know where we are and whither we are tending, we could then be5er judge what to do and how to do it Abraham Lincoln 10

11 Suggested Best Practice Process of Reviewing State Owned Entities Assess SOE sector Performance & Structure Policies for strengthening Enabling climate Revisit legal structure for SOEs Establish effective regulatory framework Select restructuring policy options Evaluate organizational and managerial performance Propose Future strategy for SOE reform Impose hard budget constraints Governance and management Commercialisation Non Commercialisation Viability Funding Vision for contribution to development Contracting out Mergers Rationalisation Service Delivery Governance Entities missions and objectives Public-Private Partnerships Transformation Performance criteria Strategic Focus Ownership Developmental goals Skills Development Source: United Nations,

12 3. Preliminary Observa(ons

13 Rationale for Creation of SOEs by Governments q To undertake commercial activities to promote economic growth on behalf of government q To improve service delivery q To undertake infrastructure development and management q To regulate certain sectors where competitive, tariffs, fees, etc are eminent q To promote national values and heritage q To ensure democratic and constitutional values are upheld q Where private sector investors refuse to serve less profitable areas q Where private sector investors do not have the incentive in industries that benefit others without being paid q To ensure constant and reliable supply of life critical commodities 13

14 At Issue: Some Problem Statement Elements q Are the failures of SOEs exaggerated? q Do commercial Entities in fact perform worse than private firms? q If the failures exist in SOEs, and reform is necessary, how should it be accomplished? q Can SOEs be reformed from within, or are they intrinsically inefficient? q Would changes in the operating environment improve SOE performance, or is a wholesale change of ownership necessary? q Are SOE inefficiencies a by product of government-required social objectives and do the benefits from these social goals outweigh the cost of inefficiency? q What is the role of SOE s in a Developmental State? 14

15 Some Cri(cal observa(ons 1. Role of SOEs in a developmental state 2. Defini(on of SOE 3. Current SOE Governance & Ownership Model 4. Legisla(ve and regulatory environment that is characterised by conflicts, duplica(on and gaps 5. Performance of SOEs 6. Alignment of SOEs to Government Impera(ves 7. Relevance of SOE s should take into account: 15

16 4. Review Framework

17 Func(ons of the Presiden(al State Owned En((es Review Commi5ee: The Presiden4al State Owned En44es Review CommiAee must review State Owned En44es and make recommenda4ons on: 1. A common understanding and defini4on for State Owned En44es; 2. The place of State Owned En44es in a developmental state; 3. Strategic importance and value crea4on of State Owned En44es; 4. The viability and funding of State Owned En44es; 5. Exis4ng pornolio of investments by the state in strategic businesses; 6. The efficiency and effec4veness of State Owned En44es with respect to service delivery; 7. Current policy and regulatory framework and the impact thereof on the management of State Owned En44es; 8. The balance of social, poli4cal and economic impera4ves in delivering objec4ves for State Owned En44es; 9. Harmonisa4on of performance measurements among State Owned En44es; 10. Standardisa4on of accoun4ng and repor4ng processes for State Owned En44es; 11. Shareholder oversight and governance of State Owned En44es. 12. Recruitment, selec4on and appointment of boards and execu4ve management of State Owned En44es; 13. Remunera4on policies of State Owned En44es taking into account wage differen4al aspects; 14. Current restructuring ini4a4ves (priva4sa4on, retrenchments, PPPs etc) of State Owned En44es, and implica4ons thereof; 15. State Owned En44es as a planorm for sustainable human capital development and a catalyst for scarce skills; 16. Establishment of a comprehensive database of State Owned En44es across all spheres of government; 17. Policy for the establishment and de- establishment of State Owned En44es; 18. Criteria and framework for iden4fying and establishing priority State Owned En44es; relevant global benchmarking and best prac4ces; 19. Alignment, collabora4on and coopera4on among State Owned En44es for the purpose of op4mising state resources; 20. Rela4onship and collabora4on between Government Ministries to facilitate achievement of SOE objec4ves; 21. Compliance of State Owned En44es to the government s development and transforma4on agenda. 17

18 PRC WORK STREAMS Development and Transforma(on Common understanding & defini(on... Place of SOE in development state Balance of social, poli(cal and economic impera(ves Sustainable human capital development; launch pad for scarce skills Compliance with government s development and transforma(on agenda Ownership and Governance Current policy and regulatory framework Standardisa(on of accoun(ng and repor(ng ( Transparency & Disclosure) Shareholder oversight and governance ( board responsibili(es) SOE Database Recruitment and selec(on of boards... Board performance and fees Business Cases (Viability) Strategic importance and value crea(on Viability and funding Current restructuring op(ons e.g. PPPs and priva(sa(on Policy for establishment and de- establishment of SoEs Criteria for establishing priority SOEs Relevant global benchmarks Strategic & Opera(onal Effec(veness Efficiency and Effec(veness in Service Delivery Harmonisa(on of performance measurements Remunera(on policies, wages and accoun(ng Alignment and collabora(on between SOEs, government departments and Ministers Research and Development Unit To support all research outputs of the PRC To source for and consolidate all research requirements of the PRC 18

19 Review Activities Literature Review (including concept papers by experts) Seminar Series Call for Submissions (written and oral) (Supported by The SABC) Interviews with experts Engagements with SOEs Engagements with Stakeholders (shareholders departments, provinces, and metros, civil society, Business associations ) A Survey of SOEs Strategic Research Selected deep-dive studies Case Studies Focus Groups Benchmarking (local and international) 19

20 5. Progress Update

21 Other aspects q The PRC also collaborates with other allied structures such as the Planning Commission, the AG, The SOE Procurement Forum, The BBBEE Council etc q Seminars are ongoing targe(ng significant review issues q Hosted a 5 country benchmarking seminar for sharing review experiences q Provincial and Local Government engagements q SOE engagement and hearings commenced in June 2011, and are con(nuing q Con(nue to receive public submissions q Stakeholder engagements with poli(cal par(es, business and other civil society organisa(ons is embarked upon q Interna(onal Benchmarking Visits completed the European cluster q Primary research ini(a(ves conducted by HSRC,KPMG, PWC 21

22 PRC Stakeholders Matrix Parliament & Chapter 9 Institutions Importance Media Strong Presence [maintain] Provincial Government Opposition Local Parties Government DPE DGs Presidency The Cabinet Deputy Presidency Other Govt Departments Public Service SOE s Suppliers partners Ruling Party Other Interest Groups & Political Parties Big Business Financial Institutions Community Civil Society Global Stakeholders Mild Presence [improve] Weak Presence [attend] Influence 22

23 6. Par(cipa(on Plarorms

24 PARTICIPATION OPPORTUNITIES Information, reports and documentation relevant to the SOE review Participation: submissions, hearings, policy dialogues Appraisal on current SOE review/ research activities undertaken by stakeholders A dedicated person to facilitate engagements with the Committee Cooperation with research work commissioned by the PRC Collaboration on strategic case studies Other relevant recommendations 24

25 Thank you 25