Treasury vs. Presidency: the looming showdown over South Africa’s SOEs - Patrick McLaughlin

Key topics:

• Bill proposes centralised SOE holding company under Presidency control

• Treasury warns PFMA gaps, fiscal risks, and potential governance issues

• Opposition parties and watchdogs reject model, citing political abuse risks

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By Patrick McLaughlin*

The National State Enterprises Bill [B1-2024] has now formally entered the Parliamentary arena, introduced by Planning, Monitoring and Evaluation Minister Maropene Ramokgopa. But in a curious procedural quirk, the Bill is still tabled in the name of the Minister of Public Enterprises — a department that no longer exists — in the name of its late originator, Pravin Gordhan. 

For now, the core contest is emerging between the Presidency’s political drive for a centralised SOE holding company and National Treasury’s caution over fiscal oversight, legal consistency, and governance safeguards.

The Presidency’s pitch

Minister Ramokgopa told the Planning, Monitoring and Evaluation Committee that some SOEs were indispensable for fiscal purposes or profit generation, while others played a strategic socio-economic role in enabling economic growth. 
The Bill’s centralised model, she argued, would allow SOEs to operate like companies, but under a single holding company able to streamline decision-making and bring in private investment — all while retaining state control.

 “The preferred model should allow SOEs to run themselves as companies; however, in terms of supervision, it is necessary to ensure the PFMA is adhered to,” she said, referring to the Public Finance Management Act.

Her aim, she told MPs, was for the Bill to move swiftly through Parliament so that the holding company could be implemented without delay, helping to boost the economy, create jobs, and build what she called “a capable state.”

Treasury’s red lines

Treasury’s representatives, who earlier had expressed to Parliament deep concern on the subject of financial oversight, were careful to acknowledge the need for SOE reform but flagged a list of unresolved risks. Chief among them: the Bill’s current wording excludes the holding company and its subsidiaries from most provisions of the PFMA, apart from two clauses.

Section 216 of the Constitution requires NT to enforce uniform norms and standards for financial management across all spheres of government. Treasury’s view is clear: if public funds are involved — whether through equity injections, guarantees, or operational subsidies — the PFMA must apply.

Treasury and DPME have discussed a hybrid application, where some PFMA provisions would be retained alongside the Companies Act. But, as Treasury told MPs, there are also constitutional and practical concerns around the concentration of control in a centralised structure. While DPME argues this will reduce political interference, NT warns it could just as easily increase it.

Political reactions: sharp divisions

MPs across the spectrum signalled that the Bill will not pass without serious challenge.

EFF representatives said the centralised model was a “predetermined objective” without proper justification, and that governance failures are primarily about personnel and accountability, not structure. Without keeping SOEs under Parliament’s scrutiny, they argued, political abuse of funds is inevitable.

MKP’s Mzwanele Manyi went further, accusing DPME of moving SOEs out of the public procurement environment — undermining transformation goals — and described the Bill as “licensing state capture.” He noted that the Department of Public Enterprises had not been abolished but relocated under the Presidency, a move he saw as dangerously close to both Treasury and the Reserve Bank. The MKP rejected the Bill outright.

The Democratic Alliance pointed to overwhelming opposition in public submissions (222 against, only 7 in favour) and described the Bill’s Malaysian, Singaporean, and Chinese inspirations as ill-suited to South Africa’s democratic system. They urged consideration of OECD-style models with stronger independent oversight.

The watchdogs weigh in

The Financial and Fiscal Commission (FFC) cautioned that any model dependent on R615 million in start-up funding — without being subject to the full PFMA — is a “major fiscal risk.” Past experience, they said, shows that SOEs seldom become self-sustaining and often return to the fiscus for bailouts.

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The FFC also warned of governance risks if the holding company model moves ahead without independent regulation in sectors where SOEs operate. Without this, the ability to attract private investment will remain limited.

In its current form, the Commission does not support the Bill. The advice was blunt: amend the Bill substantially before considering it for adoption.

The politics of timing

This early-stage skirmish is not just about policy design — it’s a test of political will inside Parliament. Even with amendments to address Treasury’s oversight concerns, the Bill may struggle to secure enough votes at the Motion of Desirability stage. If that happens, President Cyril Ramaphosa could be told to hold back and rethink, rather than push ahead.

That political reality may explain why the Presidency is still talking up the Bill’s potential benefits, while Treasury is quietly signalling the need for patience and deeper revision.

More of the same?

For business and the investment community, the underlying concern is familiar: ideological centralisation as a policy reflex, rather than a targeted solution to management and operational failures. South Africa’s SOEs do need reform — few dispute that. But concentrating control in a single entity close to the Presidency, especially at a time of fiscal constraint, risks repeating old mistakes.

With Parliament’s first hurdle approaching, the outcome will be a signal to the business world of whether SOE reform in South Africa is moving toward practical solutions — or just more of the same political and bureaucratic reshuffling.

*Patrick McLaughlin is a parliamentary affairs analyst and publisher of ParlyReportSA.com. He writes regularly on legislative developments affecting South African business and economic governance.