20 November 2014
The Role of State-Owned Enterprises in South Africa’s Development and the Important Role that SOE Communicators can play in the developmental space.
Master of Ceremonies, President of the State Owned Entities Communicators Association, Mr Congress Mahlangu, the Executive of SOECA, CEO of the Road Accident Fund Dr Eugene Watson, Communication Managers from both Government and State Owned Entities, members of the media, ladies and gentlemen, good evening.
It is very gratifying to be part of the launch of such a strategic body in the government communications space. State owned entities play a critical role in our society – which role manifests through their contribution to the economy, job creation, skills development, procurement of good and services and the delivery of services to citizens.
The importance of state owned entities in the developmental aspirations of government was reaffirmed by President Zuma when in 2010 he established a Presidential Review Committee on SOEs.
The Review Committee was a response to the need to beef up policy on SOEs and to strengthen their role in the economy in particular and in society in general. Critically, the Committee was mandated to assess how SOEs can respond to a clearly defined public mandate and support the developmental state aspirations of our government.
The Committee has since finished its work and in May last year it handed its report to the Presidency. As a result of the work undertaken by the Review Committee, we now know that we have 715 SOEs serving various commercial and non-commercial objectives across all spheres of Government.
The Review Committee has made a number of recommendations which have been accepted by Cabinet. An Inter-Ministerial Committee was established to guide the implementation of the Committee’s recommendations.
The National Development Plan, and the accompanying National Infrastructure Plan, has set out ambitious strategic goals, together with practical frameworks, to address the country's most pressing challenges of poverty reduction, job creation, infrastructure development, economic growth and transformation. As the implementation process of the Plans is now underway, the role of the country’s State-Owned Enterprises, working in partnership with the private sector and Government to achieve these goals will become increasingly more important.
As a developmental state, South Africa needs to maintain its strategic role in shaping key sectors of the economy in order to stimulate much-needed economic growth in the country. This means the role of State-Owned Enterprises and agencies in advancing the country’s overarching industrial policy and economic transformation objectives becomes critical. They can be strategically used to further economic growth and development, thereby creating significant number of jobs, reducing poverty levels, reducing inequality, developing key skills required by the South African economy, improving the health of the citizens, and reducing crime and corruption. These are all key building blocks of a strong, developing economy and one that has the potential to benefit all citizens and stakeholders.
Importantly, the primary role of SOEs is to ensure the security of supply and the efficient and competitive provision of key economic infrastructure; facilitate the development of advanced manufacturing capability through strategic investment; and to assist in rectifying economically stifling market or regulatory failures especially in the area of network infrastructure. However, the SOEs also have critical secondary roles to play in the country’s economic growth and development, particularly focused on skills development, innovation, and job creation.
In addition to these strategic and secondary roles, SOEs have the added advantage of being able to act as a vehicle for government investment in strategic infrastructure and manufacturing to stimulate growth and development, for example, in the form of Capital Formation through infrastructure investments. In addition, through ownership, the state is effectively the project champion and in a position to ensure stability and consistency of strategic intent – even when the scale and risk profile of the project goes beyond the appetite or capabilities of the private sector.
SOEs also have the ability to raise capital on the capital markets utilizing a far greater range of instruments than that available to the national fiscus, depending on their existing assets and their business outlook. This can free up significant amounts of money from the fiscus to fund objectives that require direct government funding. State-Owned Enterprises have the ability to partner with global companies that cannot only provide additional capital but also rapidly introduce new technologies, business processes and markets to the country, allowing development to proceed at a far greater pace than what can be achieved in isolation.
Importantly, SOES also have the unique ability to drive Skills and Technology Development for Industry Upgrading on a mass scale. State-Owned Enterprises are the key drivers of industrial skills and technology development initiatives, as the skills and technologies that are produced need to ultimately be relevant in the workplace context. SOEs are therefore well positioned to set objectives and coordinate these initiatives within their respective supply chains, thereby ensuring active participation by all key industry players. These programmes can in turn build relationships between both public and private enterprises and unions within an industry as a whole, around a powerful vision of increased capability and productivity, all of which is good news for the country’s overall growth and development.
State-Owned Enterprises today face a wide range of strategic national objectives that need to be met, and key challenges that require innovative solutions if they are to be addressed for the long-term. They must serve the needs of capital-intensive industry; provide secure employment opportunities; boost opportunities for black participation in the economy; help government to implement and learn from implementing new industrial policy; and narrow inequalities in access to basic services such as water, sanitation and electricity. The emphasis placed on these State-Owned Enterprises makes it particularly important to ensure that they operate effectively and in the public interest over the long-term. Effective communication with all stakeholders who have an interest in the country’s economic growth and development, and need to understand the important role that the SOEs have to play in this regard, is therefore critical.
State-Owned Enterprises can become powerful levers that government can use to drive greater development and economic growth. This has been proven over many years in the global marketplace, where governments have intervened directly such as in East Asia, Norway and Brazil to pursue economic development goals. These and other countries have built strong and successful SOEs that compete globally and bring back required investment and support for further local development. Here in South Africa, strategic State-Owned Enterprises such as Transnet, Eskom, Prasa, IDC, DBSA, and others should be in the forefront of such developmental activity. Such intervention will require coordination and focus of resources, in particular from relevant SOEs including those where government has an indirect partial ownership, like Telkom and Sasol.
The key to the National Development Plan and the National Infrastructure Plan fulfilling their potential of creating a new and vibrant economic trajectory for the country is a genuine partnership between the nation’s citizenry, State-Owned Enterprises, and the private sector. It is a partnership that is capable of a visionary approach that looks to not only address today's economic challenges, but those of the next twenty to thirty years. If one looks to other developing nations, such as the BRICS grouping of nations of which South Africa is a member country together with Brazil, Russia, India and China - or indeed the developed world - then such strategic partnerships that genuinely harness the strength of State-Owned Enterprises have been seen to drive growth in key industry sectors. This approach, combined with harnessing the skills and inherent passion and commitment of the country’s citizens, are being seen to act as powerful catalysts to stimulate and facilitate fast-track development, expansion and investment in South Africa.
Let us also remember that because the companies represented by this forum operate in a global environment, our view of issues must be broader, covering the continental perspective and give a global overview.
Today, South Africa is faced with the challenge of genuinely developing its competitive edge in the face of increasingly difficult global socio-economic and political challenges that are testing the most developed economies in the world. The engagement of all stakeholders and citizens in the country to work in partnership to achieve these goals could definitely hold one of the keys to competitive success.
The need, therefore, for State-Owned Enterprises to effectively and regularly communicate and engage with all stakeholders, both at home and abroad, has never been greater. After all, the message that needs to be heard loud and clear is that South Africa is entering an exciting new phase of its development, it is open for business, and importantly, it is a global destination of choice for new investment and development. Underpinning all of those messages is the pivotal role being played by South Africa’s State-Owned Enterprises.
The foundation for building a strong developmental environment in South Africa will to a large extent be dependent on South Africa’s ability to establish an educated and well trained citizenry in the country, with high levels of numeracy as well as computational skills, creating a harmonious society with strategic partnerships amongst labour, government, industry and society, as well as efficiently allocating and distributing resources. However, its success will also depend on the country’s ability to ensure it has an engaged and well-informed population and key stakeholder network. That is where all of you gathered here today have an important role to play.
In a time of continuing global market turmoil, the time has never been better for the creation of a new Association of State-Owned Enterprise Communicators to help South Africa in its efforts to drive greater stakeholder engagement, both at home and abroad. Strategic communication around important issues of growth and development, and the role of the country’s State-Owned Enterprises in creating the unique differentiators that can position South Africa as a globally competitive nation, has never been more important. The time has never been better for all of you, as passionate and loyal South African communications specialists, to play your part in helping to write the next exciting chapter in the country’s developmental history.
As we move forward as a nation to creating a new and vibrant economic trajectory for our country, we recognize the important role to be played by communicators in getting the key messages across to all stakeholders both at home and abroad. We invite all of you, as State-Owned Enterprise Communicators, to work closely with the various line government departments in ensuring a new era of stakeholder engagement is embarked upon in our country. We encourage you to work closely with the Department of Communications itself, and to participate in the current communications policy review that is underway, including making inputs to the work of the National Communications Task Team. In this way, you are all key players in a strategic partnership that looks to advance the role of communications in the country’s achievement of its developmental goals.
You may be wondering what all this has to do with SOE communicators. From the Review Committee’s report, which I would encourage you to read, it is clear that change is coming to SOEs. Government is seeking to re-orient SOEs towards the attainment of the country’s socio-economic and developmental goals.
Ladies and gentlemen, a functioning democracy needs an informed citizenry. Providing citizens with adequate information on priorities, programmes and activities ensures not only the legitimacy of a government and its agencies, but also institutes regimes of transparency and accountability.
Communications must move beyond the flagging of the highlights of government successes in the media but must be the communications that moves markets, shapes opinions and corrects perceptions. We have a massive responsibility to align our system of communications to ensure that it has proper strategic capacity to achieve these goals.
Our responsibility also moves to the education and empowering role, which means that for our society to fully appreciate what our economy is going through and what our State Owned Enterprises are doing to respond to the challenges not only of their internal dynamics but those of the global economic climate, we must have a better structured communication machinery.
Government communication performs three basic functions i.e.: informing the citizens, advocating/persuading (for policies and reforms), and engaging the citizens. A well-conceived government communication programme will build broad support and legitimacy for programmes; will be responsive to citizens’ needs and provide mechanisms to hold government accountable.
Within this framework, SOEs must define their communication agenda. SOE communication must be more than just crisis management – which unfortunately seems to be what dominates the communication agenda of some of our SOEs these days. SOE communication should entail pubic consultation, achieving consensus, raising awareness, changing behaviour, fostering transparency and civic education, as well as listening to or feeling the pulse of society.
You are all aware that our government is currently driving a major infrastructure development programme. Most of the projects in this regard are being carried out by our SOEs. How these projects will get society’s buy-in largely depends on how they are or will be communicated. And this is where your role as SOE communication practitioners comes in.
A key indicator of effective SOE communication is enhanced citizen participation. Therefore, SOE communication is not just about developing effective spokespersons with sharp sound-bites. Rather, it should also involve the development of citizen oriented services and building capacities for citizens to feedback on their experiences with our SOEs. Neglecting to provide information directly of the public represents a serious impediment to the public’s understanding of the role of SOEs.
Talking about developing citizen oriented services and providing information directly to the public, I must say, Dr Eugene Watson, that I am impressed with your RAF on the Road initiative. For those who don’t know, this is a campaign where the Road Accident Fund literally hits the road as part of its public engagements to not only educate the public about the business of the Fund but also to take its services to the door-steps of the people who need it the most.
A new communication paradigm for SOEs must, of necessity, critically assess the communication platforms these entities have been using to date. Are they reaching the majority of our citizens? Are the media choices we make inclusive or do they, wittingly or unwittingly, perpetuate the view that only the urban elite deserve to know about the activities and programmes of our SOEs?
In particular, is there no case for SOEs to increase their use of community media or alternative media in order to communicate their messages? When I used to serve as a Member of the Communications Portfolio Committee in Parliament, we urged the executive arm not to neglect community media in their choices of where or through which medium to communicate. In fact, we encouraged the former GCIS in its efforts to increase government’s expend towards community media.
I was, therefore, pleased to read a few months ago that SOECA, together with the State Owned Entities Procurement Forum, had taken the decision to allocate 30 percent-plus of their expend towards community media. I hope all your members have embraced that position and by year end you will be in a position to tell us, in numbers, what progress you have made in this regard.
Talking about media platforms, it is practically impossible for the mainstream media to carry all of your stories. There are 715 of you and if only 10 percent of you were to release media statements in one day, there is no newspaper, radio station or TV channel that will carry all your stories or press releases. From a space or air time point of view, that would be impossible, even with the best and well intentioned news editors and editors.
This is where the idea of “own media’ becomes relevant. I have yet to understand why as government and state owned agencies we are modest and shy about the idea of ‘own media’. The corporate sector is not shy about this. Retailers have club magazines targeting their customers and so do medical aid schemes. Even soccer clubs nowadays have their own media properties – be they magazines or programmes on pay television. The point is: they do not solely rely on commercial media to convey their messages.
Now, I have heard the argument that government and its agencies cannot venture into that domain because it will be regarded as propaganda. Propaganda my foot! Did you know that the United States of America, yes that First Amendment Country, has a weekly address by its President that is published every Saturday morning and is freely taken up by a number of electronic broadcasters depending on the news value they attach to the address?
No one calls that propaganda. In fact, President Obama has turned these weekly addresses, a tradition started as radio broadcasts by President Franklin D. Roosevelt in 1933, into multimedia offerings available in both audio and video forms. I am pointing out the White House’s weekly address to illustrate what other countries are doing in the “own media’ space.
With your budgets permitting, I urge you to explore what you can do in the ‘own media’ space as individual agencies or as a collective under a particular portfolio. I know you are all worried about Finance Minister Nhlanhla Nene’s pronouncements on marketing and communication during his recent Medium Term Budget Policy Statement. I did not understand him to be saying marketing and communication are not important. Rather, government is looking for innovation and how you can stretch the rand to make maximum impact.
I have seen that in your aims and objectives you do say that you will identify areas where synergies among yourselves do exist and exploit these for the benefit of the sector. Well, I challenge you to explore those synergies when it comes to own media. I would like to see radio and TV shows on the SOE sector jointly funded by yourselves. Working together you can achieve much more than what you would working in isolation from each other.
In conclusion, it would be remiss of me as a Cabinet Minister not to remind you that as SOEs you are not islands entire unto yourselves (with due apology to John Donne). A great number of you report to shareholder departments. Therefore, it is important that in your communication you project the policy posture of the government of the day. Your autonomy and independence cannot mean that you are independent of the shareholder and can pursue your own policies and communication agenda.
We should see SOE communicators working closely (not in competition) with their counterparts in the line function departments to which they report. At a macro-level, I would like to see a close working relationship between SOECA and the Department of Communications. Ultimately, we are all pursuing one vision and one agenda: making the lives of South Africans better.
With these few words, I commend the efforts behind the formation of SOECA and declare the Association officially launched.
So, as we gather here today, to formally launch this new Association of State-Owned Enterprise Communicators, we look forward to working with each and every one of you to advance the cause of, not only effective strategic communications in South Africa, but also its pivotal role in informing and engaging key stakeholders in the future economic growth and development of our country. The message is clear – South Africa is open for business, and our State-Owned Enterprises are building a strong foundation for growth, development and investment for the future.