Presidential SOE Review Committee (PRC)

1. Presidential SOE Review Committee(PRC) 12 October 2010 Cape Town

2. Context • President Zuma announced the establishment of The Presidential SOE Review Committee on the 12 May 2010 during his budget vote • The PRC is a 12 Person Committee – Permanent and Non-permanent members – it is a strong guiding team of people with the right qualities and commitment to drive the review process • The PRC held its inaugural meeting with the Minster of PME, Minister Chabane on 18 May 2010 and met with the President on the 8th of July 2010 • A project initiation period of 3months was provided before the commencement of substantive work. This period was dedicated to set up processes: • Engaging, clarifying and interpreting the mandate of the committee • Developing Terms of Reference (ToR) • Developing a framework for the Review • Setting up the Review Committee Secretariat • Securing premises for the seat of the PRC • Developing a resource plan for the Review committee • Identifying and negotiating with partners and possible suppliers of services • Establishing a Research Development Unit

3. Context …. continued • To date 7 full day workshops were held by the PRC • Numerous work sessions are held by the PRC work streams • The first PRC Seminar is taking place on the 22nd & 23rd October focusing on transformation, developmental state and definition of SOEs • The second PRC Seminar is scheduled for November and shall focus on diverse aspects of governance, ownership and the legal framework for SOE’s • A third seminar is planned for the beginning of December in Collaboration with the Organisation for Economic Co-Operation and Development (OECD) – focusing on diverse benchmarking aspects

4. Some Drivers behind the review Historical backdrop of State Economic Intervention in SA 1994 Democratic Developmental State • Transformation Imperatives • Investment priorities • Performance issues 2010 Current SoE Environment SOE Review • Unbundling • Reinvestment • Consolidation Beyond 2010 Re-implementation of State Owned Enterprise Developmental State Imperatives

5. PROGRESS TO DATE

6. Functions of the Presidential State Owned Enterprises Review Committee:The Presidential State Owned Enterprises Review Committee must review State Owned Enterprises and make recommendations on - • A common understanding and definition for State Owned Enterprises; • The place of State Owned Enterprises in a developmental state; • Strategic importance and value creation of State Owned Enterprises; • The viability and funding of State Owned Enterprises; • Existing portfolio of investments by the state in strategic businesses; • The efficiency and effectiveness of State Owned Enterprises with respect to service delivery; • Current policy and regulatory framework and the impact thereof on the management of State Owned Enterprises; • The balance of social, political and economic imperatives in delivering objectives for State Owned Enterprises; • Harmonisation of performance measurements among State Owned Enterprises; • Standardisation of accounting and reporting processes for State Owned Enterprises; • Shareholder oversight and governance of State Owned Enterprises. • Recruitment, selection and appointment of boards and executive management of State Owned Enterprises; • Remuneration policies of State Owned Enterprises taking into account wage differential aspects; • Current restructuring initiatives (privatisation, retrenchments, PPPs etc) of State Owned Enterprises, and implications thereof; • State Owned Enterprises as a platform for sustainable human capital development and a catalyst for scarce skills; • Establishment of a comprehensive database of State Owned Enterprises across all spheres of government; • Policy for the establishment and de-establishment of State Owned Enterprises; • Criteria and framework for identifying and establishing priority State Owned Enterprises; relevant global benchmarking and best practices; • Alignment, collaboration and cooperation among State Owned Enterprises for the purpose of optimising state resources; • Relationship and collaboration between Government Ministries to facilitate achievement of SOE objectives; • Compliance of State Owned Enterprises to the government’s development and transformation agenda.

7. PRC Work Streams • Common understanding & definition • Place of SoE in development state • Balance of social, political and economic imperatives • Sustainable human capital development; launch pad for scarce skills • Compliance with government’s development and transformation agenda Development and Transformation Ownership and Governance • Current policy and regulatory framework • Standardisation of accounting and reporting • Shareholder oversight and governance • Recruitment and selection of boards... Business Cases (Viability) • Strategic importance and value creation • Viability and funding • Current restructuring options e.g. PPPs and privatisation • Database • Policy for establishment and de-establishment of SoEs • Criteria for establishing priority SoEs • Relevant global benchmarks • Efficiency and Effectiveness in Service Delivery • Harmonisation of performance measurements • Remuneration policies, wages and accounting • Alignment and collaboration between SOEs • Relationship and collaboration between Government Ministries Strategic and Operational Effectiveness Research & Development Unit • Consolidation of PRC research & subject matter experts • Analysis of information, best practices, benchmarks, databases & report writing

8. To support and enable the PRC to achieve the review objectives To cluster the ToR of the PRC allowing for common and related matters to be dealt with by a dedicated work stream and by so doing, allow for detailed in-depth attention of matters thus allowing for superior delivery of outputs • Work streams shall be chaired by PRC members • Other PRC committee members shall by allocation be part of a work stream • To achieve better coordination across streams the Chair & Vice Chair to each be part of two streams • Each stream to have dedicated fulltime operations facilitation and project support through a dedicated project coordinator • Each work stream to be allocated a dedicated researcher whist benefiting from the pooled research capacity • Participation and involvement of technical and expert resources to be determined by the work stream Structure Purpose The guiding team Work stream purpose & structure “Reason for existence”

9. Programme/Project Structure PRC Committee Steering Committee Chairperson PA Executive Manager Works Stream Leader V/Chairperson (COO) PA Work Stream members (PRC) Programme Office Manager Corporate Services Support Manager Project Logistics Support Work Stream Project coordinators Researchers Project coordinators (5)

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

11. Thank You!