The end of ProPriv paves the way for the State’s asset manager to move decisively towards a more professional and demanding structure. Transparency in management and accountability are essential principles that should guide a holding company in order to promote competition and innovation.
The Government intends to legislate on the legal framework governing Holding Companies (SGPS) and has already received Parliament’s approval, authorising the President of the Republic to address the matter. One of the objectives is to transform the State Asset and Participation Management Institute (IGAPE) into a holding company. This process, however, is long overdue.
In 2020, in an interview with Expansão, then-IGAPE President Patrício Vilar stated that it was the institute’s goal to evolve into a holding company.
“It is no longer a possibility; it is almost a certainty. What remains uncertain is the timing,” he said in the Grande Entrevista published on 8 May 2020.
The appropriate timing depended on the completion of the privatisation programme, which is now nearing its conclusion and aims to ensure that the State retains ownership of viable companies.
“IGAPE first needs to establish a portfolio of companies that will allow it to survive as a holding company. It is necessary to clean up, improve and make these companies profitable before creating a holding company within an efficient State-Owned Enterprise Sector,” he concluded.
Expectations are therefore that the completion of ProPriv this year will usher in a new cycle in the management of the Public Business Sector and the State’s shareholdings. Experts argue, however, that transforming IGAPE into a holding company will only add value if it introduces commercial discipline and accountability into the public enterprise sector. Otherwise, it will simply amount to changing one acronym for another while preserving the same structural problems.
For example, economist and consultant Carlos Vaz argues that IGAPE’s evolution into a holding company will only make sense if it introduces what has so far been lacking: strict budget constraints, a clear separation between the State as shareholder and management as operator, and accountability for results. He notes that in other countries these issues are handled differently, encouraging innovation, entrepreneurship and economic growth.
Meanwhile, economist and researcher Agostinho Mateus, from the Economic Research Centre of the Lusíada University of Angola (CINVESTEC), believes that under the future legal framework IGAPE will indeed evolve into a holding company.
“IGAPE was designed to privatise assets, and it has been carrying out that role. However, the State will continue to hold stakes in strategic companies that it does not intend to sell, at least not in the short term. Managing this remaining portfolio efficiently is a challenge that still lacks a clear solution,” he said.
According to the researcher, a public holding company—whether a restructured IGAPE or a new entity—would be a logical solution to this challenge. Similar models exist in other countries and have proven effective when there is genuine management autonomy free from political pressure. More importantly, they require stronger oversight and efficient accountability mechanisms.
Source: Expansão
