Reforming SOEs will be a critical lever in SA’s future development

South Africa’s development trajectory is inseparable from the performance and reform of its state-owned enterprises (SOEs). As the government intensifies efforts to build a capable, ethical and developmental state, the reform of SOEs has emerged not only as a governance priority, but as a central instrument for driving inclusive growth, improving service delivery and reducing fiscal risks.

At the heart of this reform agenda is a fundamental recognition that the SOEs were established to serve strategic national objectives. At their optimal performance, SOEs can accelerate development outcomes and improve growth and public trust, and lessen the strain on the public purse.

Recent developments within the Department of Planning, Monitoring and Evaluation (DPME) signal a shift towards a more coordinated and integrated SOE reform approach. The establishment of a dedicated SOE Reform Unit marks an important institutional step towards strengthening oversight, governance and sustainability across the SOE portfolio.

Crucially, this reform effort is not occurring in isolation. It is anchored within a broader planning framework that aligns SOE performance with national priorities, including the Medium-Term Development Plan 2024-2029 and the National Development Plan (NDP) Vision 2030.

This alignment is essential as development outcomes, such as economic growth, infrastructure expansion and improved service delivery, cannot be realised without clear coherence between policy, planning and implementation. By ensuring that SOEs are integrated into this planning architecture, the government is laying the groundwork for more coordinated and impactful interventions.

A key pillar of the reform process is the rationalisation and restructuring of SOEs. The DPME is working with key stakeholders, including the Presidential State-Owned Enterprises Council, to reposition 26 major SOEs, including Water Boards, so that they are optimally configured to support national development priorities.

This effort speaks to a broader challenge that has long characterised the SOE landscape: fragmentation, duplication of functions and misalignment with national objectives.

Rationalisation is therefore not simply about reducing numbers; it is about ensuring that each entity has a clear mandate, strong governance structures and the capacity to deliver.

Through restructuring and repurposing, the government aims to create SOEs that are agile, efficient and responsive to development needs in various sectors such as energy, water, transport or other critical sectors.

Another critical dimension of reform is governance. Weak governance has historically undermined the effectiveness of SOEs, leading to inefficiencies and, in some cases, systemic failure.

To address this, the DPME has introduced a suite of reforms, including:

• A comprehensive SOE rationalisation framework;
• Standardised guidelines for the appointment of boards and chief executives; and
• The development of a uniform remuneration framework for board members.

These measures are designed to professionalise leadership, strengthen accountability and ensure that governance structures support performance rather than hinder it.

Importantly, these reforms are reinforced by the National State Enterprises Bill, which seeks to establish a more coherent legislative framework for the SOE sector. This represents a critical step towards embedding reforms in law, thereby enhancing enforceability and institutional stability.

While governance and restructuring are important, the ultimate test of SOE reform lies in its contribution to development outcomes.

SOEs are central to the delivery of key public goods such as electricity, water, transport and infrastructure. These public goods underpin the broad economic activity and social wellbeing of the citizenry. It is widely accepted that effective SOEs can enable economic growth by supporting industrial and infrastructure development; improve service delivery, particularly in

underserved communities; reduce inequality by expanding access to essential services; and lower fiscal risks by operating efficiently and sustainably.

Through ongoing performance monitoring, including the Annual SOE Performance Monitoring Report, the government is strengthening its ability to track progress, identify gaps and intervene where necessary.

This results-based approach ensures that SOEs are not only managed for compliance, but for impact.

The reform of SOEs must ultimately be understood within the broader vision of building a capable and developmental state. This requires institutions that are not only well governed but also aligned with long-term national priorities and responsive to the needs of citizens.

In this context, SOE reform is not a standalone intervention but is part of a larger transformation of the state machinery. It complements efforts to strengthen planning, improve monitoring systems and enhance evidence-based policymaking.

South Africa stands at a critical juncture where the reform of SOEs can either unlock or constrain its development ambitions. The current reform trajectory, led by the DPME and its partners, reflects a deliberate and structured effort to reposition SOEs as drivers of development rather than sources of risk.

The success of this agenda will depend not only on policy and institutional reforms, but also on sustained political will, stakeholder collaboration and a relentless focus on results.

If implemented effectively, SOE reform can play a transformative role in advancing the objectives of the NDP and thereby deliver tangible improvements in the lives of South Africans and strengthen the foundations of an inclusive, resilient economy. DM