ABSTRACT
As a developmental state, state-owned corporations have assumed a special mandate, namely, to ensure effective and efficient service delivery for the government of South Africa since the advent of democracy in 1994. The state is responsible for raising revenue sufficient to run the government and provide basic social services to the people. With the current exceptionally high unemployment rate, the taxes generated from a limited tax base are simply too inadequate to cater to the countless government expenditures. In addition, the government must take care of the millions of jobless people who depend on it for survival. State-owned corporations provide an essential vehicle for growth and development. By their very nature, our State-Owned Enterprises are interlinked with the constitutional mandate of the government. However, all strategic State-Owned Enterprises in South Africa face serious challenges and have been hobbling from one crisis to another. Among these major challenges, President Ramaphosa listed severe financial, operational, structural, and governance challenges facing public entities. This chapter identifies unstable governance, corruption, financial instability, and overstaffing as the four main challenges plaguing State-Owned Enterprises in South Africa. Meanwhile, there are five major root causes underlying the problems facing public entities in South Africa. They have the power to appoint and remove appointed board members, the cadre deployment policy of the governing party, political interference, breaches in corporate governance, and the failure of parliamentary oversight. The challenges facing South African strategic State-Owned Enterprises are primarily due to the inability of those tasked with their management to guard against wasteful operations and mismanagement. Such lapse in leadership that is responsible for the multiple challenges of South African SOEs is the decay in moral capital (or the moral capital bankruptcy) among public office-bearers entrusted with the stewardship of these public asserts – from politicians to political heads and to accounting authorities at the helm of the State-Owned Enterprises.
