South Africa to undertake restructuring from state holding companies to presidential commission

The Minister in the Presidency, Gwen Ramokgopa, says the commission can be created through regulations and does not need a new statute. A management company remains available later if required.

The change matters because the largest entities, including Eskom and Transnet, have repeatedly depended on fiscal support, and the abolition of the Department of Public Enterprises left ownership divided among line ministries. The principal risks are legal uncertainty over the commission's basis and powers, continued fragmentation of oversight, and delay.

On the facts reported, the Presidency has chosen speed over statutory permanence. A bill that proposed a holding company to oversee all State entities went to Parliament in 2024 but was not processed, and it was withdrawn last month. Minister Ramokgopa explained that circumstances had changed considerably since the bill was drafted, and that after stakeholder engagement and consultation with political parties the bill could not simply be rewritten and had to return to Cabinet.

The proposed replacement is a commission chaired by the President, described as a hybrid of the models used in China and Norway. It would review the national strategy that defines the role of State entities, ensure the government exercises ownership coherently, standardise governance practice, improve monitoring and coordinate rationalisation and restructuring. In the interim, the Department of Planning, Monitoring and Evaluation is preparing reform proposals, including appointment and remuneration guidelines and a framework for rationalisation.

South Africa's State entities operate under a layered framework. The Constitution of the Republic of South Africa, 1996 vests national executive authority in the President, who exercises it with the Cabinet (sections 85 and 91). Major public entities are governed by the Public Finance Management Act 1 of 1999 (PFMA), which places duties on the accounting authority, usually the board, including fiduciary responsibilities and the maintenance of effective financial and risk management (sections 49 to 51). The Treasury Regulations require shareholder compacts between entities and their executive authorities. Entities incorporated as companies are also subject to the Companies Act 71 of 2008, including its director duties provisions. Corporate governance expectations draw on the King Code.

Ownership has been structurally unstable. A Presidential State-Owned Enterprises Council was established in 2019 to advise on reform. The Department of Public Enterprises held shareholder responsibility for several major entities, including Eskom and Transnet, until it was disbanded in March 2025 and control passed to the relevant line ministries. Others, such as the South African National Roads Agency, already sat under line departments. The result is a spread of ownership across ministries with different capacities, priorities and oversight practices.

The 2024 bill proposed a single management company to exercise the State's ownership across the portfolio. Holding company models are common internationally. Norway's approach is typically characterised by arm's-length ministerial ownership under published principles, and China's by dedicated State asset supervision bodies. The Presidency describes its proposal as drawing from both.

The pressure for reform is financial and operational. Several entities have been affected by mismanagement and financial strain, and a number rely on government funding to survive. That reliance has produced sustained calls for stronger oversight, since contingent liabilities and guarantees ultimately sit on the national balance sheet.

Business and Operational Analysis

Restructuring and rationalisation can affect product lines, subsidiaries, contracts and workforce. Suppliers and lenders should anticipate that duplicated entities may be merged or wound down, and that counterparties may change. Contract terms on assignment, change of control and termination for convenience deserve review. Entities that operate in competitive or regulated markets may find that restructuring decisions intersect with sector regulators' licensing conditions.

For lenders, the commission could improve visibility of State support if it produces a consolidated view of exposure

South Africa has swapped a statutory holding company for a presidential coordinating commission. The change is quick to implement and politically easier, and its value depends on the instrument that creates it. A body with a clear legal basis and defined powers could improve board quality, monitoring and restructuring discipline. A body built on an uncertain footing risks challenge and reversal.