The Unsteady Road of South Africa's Department of Public Enterprises

The Department of Public Enterprises (DPE) in South Africa is an institution tasked with a complex mandate – overseeing the vital state-owned entities (SOEs) that are meant to drive the economic development of the nation. Yet, its history has been fraught with numerous challenges, controversies, and notable failures, culminating in a grading of 'E' for its performance. This article takes a closer look at the tumultuous journey of the DPE from its inception to the present day, offering insights into the systemic issues that have hindered its progress and exploring the attempts made towards rectification in the face of an ongoing crisis of credibility and capacity.

It all began in 1996 with the appointment of Stella Sigcau, whose term was quickly marred by allegations of corruption. From this early point, the ANC faced internal conflict over its ethical compass, as the party prioritized self-preservation over transparency, which was irreconcilable with the promised democratic culture.

During Sigcau's tenure, the push for privatization of state assets began, primarily to reduce the fiscal burden of apartheid-era debts. However, these efforts were stymied by her inability to kickstart significant privatization efforts, resulting in a mere R11 billion of assets sold against an estimated SOE value of R150 billion. The media at the time, including The Economist and the Mail & Guardian, noted Sigcau's lack of dynamism and missed opportunities that could have invigorated market confidence.

After Sigcau was replaced by Jeff Radebe in 1999, there was a brief surge in intent to liberalize state assets. Radebe aimed to sell R150 billion in assets, although his ambitious plan fell short, with only a few sales materializing, such as the 20% stake in South African Airways (SAA) – a decision later reversed.

Critical to the department's history is the era of Alec Erwin, who proposed public-private partnerships and acknowledged the flawed practice of expecting SOEs to be self-sufficient amidst developmental mandates. Yet, under-investment in entities like Eskom set the stage for future crises, a fact amplified by the leaked Roadmap for the Freight Logistics System, which highlighted the antiquated approach to managing SOEs.

The stain of state capture hit the DPE most severely during Zuma’s presidency, with ministers Gigaba and Brown overseeing a period where billions were siphoned from entities such as Eskom and Transnet. Pravin Gordhan's tenure as the minister brought some hope of transformation through reforms, even though some criticism has been leveled at him for his hands-on approach. Today, Gordhan's plan for a state-entity holding company could be a significant move away from past inefficiencies.

Such a complex history signals the need for further reform. The downfall of DPE wasn't simply due to the high-profile state capture scandals; rather, it’s the result of structural weaknesses, political power struggles, and an enduring legacy of corruption that have continually undermined the department's effectiveness. It faces the daunting task of rehabilitating its institutions while regaining public trust and ensuring the SOEs can fulfil both their commercial and developmental roles. The transformation of the DPE is not only critical for the survival of its SOEs but also for the health of South Africa’s economy and the livelihood of its citizens.