MALAIKA MAHLATSI
A week ago, the Minister in the Presidency for Planning, Monitoring and Evaluation, Maropene Ramokgopa, led a government delegation on a visit to the People’s Republic of China to engage with the country’s state-owned assets institutions and enterprises.
The aim of the visit was to promote the exchange of good governance practices and the strengthening of state governance. The South African government is currently seeking to advance the National State Enterprises Bill, which, among other things, aims to incorporate many state-owned enterprises (SOEs) under a single holding company, the State Asset Management SOC (SAMSOC). The visit by Minister Ramokgopa was thus justified as an intervention to draw from best practices on SOE reform.
I’m not opposed to benchmarking tours. Having worked in the national, local and provincial governments, I have seen the value of some benchmarking exercises. In the City of Ekurhuleni, where I worked from 2019 until 2023, benchmarking exercises were instrumental in aiding the municipality to maintain consecutive clean audits and also strengthen internal capacity.
Communities benefitted significantly from the strengthening of governance in the municipality. The municipality had a very progressive approach to benchmarking – and that was to use good performing South African municipalities for the exercise. Many of our benchmarking exercises were done locally, because there was an understanding that there’s great value in learning from what is being done right at home. And this is my criticism of Ramokgopa’s trip – that it prioritised learning from China when there are exceptionally well-run SOEs in the country that should be used for benchmarking.
Because of the poor performance of several SOEs in the country, many of which are always in the news for receiving bailouts from the state, there’s a perception that all SOEs are dysfunctional.
But this is not the case. A week ago, the Gauteng MEC for Finance and Economic Development, Lebogang Maile, gave an insightful presentation in the provincial legislature arguing against the privatisation of SOEs, which many have argued is the solution to reforming them. In his presentation, Maile used the example of Rand Water to demonstrate that turning SOEs around is possible. Rand Water, the biggest bulk water utility in Africa, is one of the best-run SOEs in the country.
Over the years, it has exceeded its key performance indicators and maintained successive unqualified audit opinions. Rand Water’s massive infrastructure drive has also seen the construction and maintenance of water infrastructure that is aimed at stabilising water supply in provinces that are hardest hit by water security challenges such as Gauteng.
In 2020, the bulk water utility began the construction of the Vlakfontein reservoir in the City of Ekurhuleni. The reservoir, which has a storage capacity of 210 000 cubic meters, was opened just three years later. It is the largest facility of its kind in South Africa and one of the largest in the world. Its construction in the industrial centre of the country, which is also the most populous province with over 15.1 million residents, is a critical intervention, especially in light of the water challenges that the province is dealing with.
Rand Water is a gem of the state in terms of its performance, and this was evidenced in the sentiments of the former Minister of Water and Sanitation, Senzo Mchunu, who had this to say about it: “As a shareholder, I must commend Rand Water for their consistent performance – be it in relation to the provision of quality bulk potable water, maintenance of infrastructure or its role as an Implementing Agent in assigned projects.
As a Ministry, we take pride in having Rand Water as part of its portfolio”. As municipalities in Gauteng battle with safe drinking water provision, Rand Water as a bulk water supplier to municipalities has come to the table to help them stabilise water supply. It is crucial to the much-needed interventions that have been proposed by the national and provincial governments.
The successes of Rand Water lie in the strategy that was implemented in 2019 with the appointment of its current Group Chief Executive, Sipho Mosai. An experienced and highly qualified water scientist with over 20 years in the water sector, Mosai developed an innovation-driven, risk-based strategy that saw the reconstitution of the organisation’s governance and operational structures, as well as significant investment in infrastructure development and maintenance.
This professionalisation of Rand Water led to it becoming a stable and profitable organisation. It is for this reason that the bulk water utility must be used for benchmarking.
The obsession with exporting and transposing solutions to our problems will result in us ignoring local-grown solutions that work. If we want to fix SOEs, we must look to those that are working, like Rand Water, and bring their executives and boards to the table to guide dysfunctional ones to a path of good governance. We're under-utilising our own local capacity while overestimating solutions in China.
While the country may have many lessons for developing countries and emerging economies to look to, it’s not the panacea to the resolution of our challenges. Where local solutions can be implemented, they must be.
Malaika is a geographer and researcher at the Institute for Pan African Thought and Conversation. She’s a PhD in Geography candidate at the University of Bayreuth in Germany.
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