DURBAN - THE governance failures of state-owned enterprises (SOEs) may most likely be a result of political leadership and their attitudes towards them.
These were the common views expressed during a high-level panel discussion with participants from around the world who were discussing the governance challenges of SOEs within the BRICS (Brazil, Russia, India, China, South Africa) group and their inability to fulfil their developmental mandates.
Head of Governance at Wits University Professor Mzukisi Qobo said South Africa had become far too accustomed to masking its problems with SOEs using the state capture commission.
“These days everybody is fixated with state capture as if all the problems with SOEs are linked to that, but there are a number of deep-seated problems. One of them is the failure of political leadership to grasp the purpose of SOEs and the failure to re-orient SOEs post-apartheid to clearly defined developmental objectives.”
Qobo also said merit-based appointments needed to become very important and this needed to be done on the basis of having an independent executive board.
“Beyond just focusing on corruption, tough questions need to be asked on the sets of relationships between political leadership, the boards and executives of these entities,” he said on Wednesday.
The University of Pretoria’s Professor Natasja Holtzhausen said: “Although South Africa has all of the pieces of legislation, regulations and policies in place, SOEs still seem to be mostly poorly managed and involved in corrupt activities.
“By default, being state-owned one would expect, although not ideal, political interference. Can the principle ever be removed from the agent? What would the real solution be?”
Pointing to how the underperformance of SOEs undermined development, Associate Professor William Gumede, also from the Wits School of Governance, said: “Corruption is systemic in many of our SOEs.
“There’s often political interference in activities and instead of focusing on development, they focus on patronage. Also because they operate as a monopoly, they do not operate competitively and know that they will be bailed out, thus they are not always run effectively as a business.”
Gumede said South Africa could draw lessons from China where corrupt officials are jailed for not managing SOEs properly.
The China Development Bank’s Li Yijun said although the BRICS was currently experiencing challenges caused by the Covid-19 pandemic, this period presented a window that could be used to look at areas of collaboration between the BRICS to strengthen SOEs.
Daily News