The South African Chamber of Commerce and Industry (Sacci) says the process of assessment and performance review is not likely to address the root causes of the crises at Eskom and other state-owned enterprises (SOEs), if the review does not include the role of cabinet as the appointing authority.
The chamber says it is concerned with cabinet’s process of selection, recruitment, retention, and performance management of SOEs.
“The review of the entire SOE ecosystem is urgent and long overdue,” it adds in a statement issued on Thursday.
This follows reports of an impending reshuffling of the Eskom board after the Department of Public Enterprises confirmed on Tuesday that a review of the board has been finalised. The department noted that “the board will soon be reconstituted and restructured”.
However, Sacci CEO Alan Mukoki says the only way for sustainable solutions to be realised is for the evaluation of skills, competencies, experience and the performance track records of selectors and decision makers to be included in the review process as well.
“The current system where cabinet appoints boards and CEOs is broken, inconsistent and unreliable. We believe it is part of the chaotic mess we see,” adds the chamber.
It says in line with established corporate governance principles, it should be the role of the board and not the shareholder to appoint the CEO of an SOE.
“With respect, cabinet may not be the right authority to select boards and senior executives, as corporate senior executive level or non-executive director level experience may not be a specific requirement to be in cabinet, as cabinet deals with a wide range of state activities.”
“It therefore would be unfair to expect high execution capability in this area, without the commensurate experience.”
Sacci says it has consistently called for the establishment of an independent commission to look at the selection and recruitment of SOE boards.
“It may be this lack of corporate level experience that leads to the blurring of lines between governance, operations, decision making and the role of the shareholder. Lack of performance may be a result of this mismatch between the appointed candidates and the complexity of the task.”
The chamber says the inability to design and implement meritocracy across the board is the main cause behind South Africa’s weakened capability.
Nondumiso Lehutso is a Moneyweb intern.