- Free SA receives close to 300 comments on the disastrous National State Enterprises Bill, all but one opposing the proposed legislation.
- Members of the public are encouraged to make their voices heard as opportunity for comment closes tomorrow (14 February 2025).
- 5 key concerns about the Bill outlined.
The Foundation for Rights of Expression and Equality (Free SA) has registered its concerns regarding the proposed National State Enterprises Bill, which it suggests will usher in ‘state capture 2.0’. The organisation has submitted a detailed parliamentary submission (see attached) outlining the risks contained in the Bill as part of the public participation process which draws to a close on Friday, 14 February 2025.
According to Free SA, South Africans have witnessed the repeated failures of state-owned enterprises (SOEs), the devastating effects of mismanagement and corruption, and the ongoing financial burden that this places on taxpayers as they keep having to bail these failing entities out.
Instead of addressing the long-standing issues, largely rooted in corruption and mismanagement, the Bill further entrenches state control, increasing the risk of political interference.
“This piece of legislation lacks a clear strategy for financial sustainability and market liberalisation, all it does is create more scope for corruption and cronyism, setting the stage for state capture 2.0,” said Reuben Coetzer, Spokesperson for Free SA.
“We received quite a large number of comments on this piece of legislation, close to 300 in total, with only one indicating support for the Bill”, Coetzer added.
Free SA made its submission on behalf of its supporters and the individuals who submitted comments on the Bill through its public participation facilitation process. The submission raised the following five key concerns regarding the Bill:
- The Bill causes excessive centralisation of power and therefore increases the risk of political interference.
- The exemption from the Public Finance Management Act (PFMA) leaves room for future abuse and corruption.
- The Bill fails to address or even acknowledge the structural problems in SOEs.
- The Bill creates more nationalisation instead of privatisation even after it has become abundantly clear that nationalisation has failed South Africans and the Bill lacks a clear privatisation strategy and measures to ensure market liberalisation that is desperately needed in South Africa.
- The Bill will cause an increased financial burden on taxpayers.
“This Bill is a fresh assault on South Africans and the well-being of our country. Rather than take the cue given by the electorate during the last general election, the ANC seems determined to ram through its last attempt at undermining the will of the people, who wanted change, in order to serve its own interests”, Coetzer continued.
Less state control and more privatisation make for economic growth and stability. Yet, this Bill proposes the creation of a single State Asset Management SOC Ltd (SAMSOC) to consolidate South Africa’s major state-owned enterprises (SOEs) under one centralised holding company. This piece of legislation grants sweeping control over critical economic sectors—such as energy, transport, and communications—to a single entity, with the President as the ultimate authority. It ultimately leads to the creation of a state-owned super-company.
By concentrating ownership and decision-making within the executive branch, the Bill eliminates essential checks and balances, increasing the risk of political interference in the management of SOEs. One of the key lessons from the state capture era is that political control over SOEs creates a fertile environment for corruption, mismanagement, and patronage networks.
The Zondo Commission detailed how excessive state influence allowed individuals with political connections to manipulate procurement processes, siphon public funds, and cripple key institutions like Eskom and Transnet. Instead of introducing robust governance reforms to prevent similar abuses, this Bill repeats the very mistakes that led to state capture—placing multiple critical SOEs in one structure that can easily be influenced by political elites.
The Bill also diminishes the role of Parliament in overseeing SOEs by shifting control directly to the executive. While Parliament currently plays a role in scrutinising state entities, this new structure weakens transparency by making the President the sole representative of the shareholder. This not only erodes public accountability but also enables the ruling party of the day to use state assets for political gain, whether through strategic appointments, preferential contracts, or financial bailouts ahead of elections.
Globally, successful SOEs operate with independence from direct political control, with boards and executives appointed based on merit rather than political loyalty. This Bill, however, fails to introduce safeguards to protect SOEs from undue political influence. Instead of adopting best practices that separate government ownership from day-to-day management, it deepens political entanglement by giving the President significant control over appointments and strategic decisions.
A decentralised and market-driven approach would be far more effective in reforming South Africa’s struggling SOEs.
Rather than centralising power within the state, competition and private-sector participation should be encouraged to improve efficiency, reduce political interference, and protect taxpayers from endless bailouts. By ignoring these realities, the Bill risks entrenching the very dysfunction it claims to address, further jeopardising South Africa’s economic stability.
