Abstract:
Governments across the globe establish State-Owned Enterprises (SOEs) or businesses
with a view of participating in commercial activities and contribute to the state purse.
If successfully established and operated, such enterprises significantly contribute to
the socio-economic development as contemplated by the National Development
(Vision 2030). This is done through ensuring that government possess substantial
control by means of majority ownership of shares. On the basis of this background,
this paper argues that SOEs in South Africa in general and Eskom and Transnet in
particular are enormously failing in executing their developmental directives due to
governance failures and state capture. It is therefore the aim of this paper to
interrogate the phenomena of governance and state capture prevalent to certain
South African SOEs in order to provide practical recommendations to remedy the
situation. ‘Bad governance’ and state capture at SOEs is worsened by the fact that
these entities continue to exist at the ‘mercy’ of National Treasury through guarantees
and bailouts. This of course has undesirable impact on the fiscus and the economy,
thereby reducing government’s capability in service delivery. Some of these anomalies
manifest despite the existence of constitutional and other legislative prescripts such
as the Public Finance Management Act (1 of 1999) amongst others. The paper is
theoretical and adopts the Kingdon’s Multiple Streams Theory to point out both the
governance mishaps and state capture in SOEs in the South African context using
Eskom and Transnet as unit of analysis. It was successfully established through literature that SOEs in South Africa are prone to state capture and grand corruption as
perpetrated mostly by those who are politically connected and affiliated particularly
to the ruling African National Congress. The paper concludes by providing
recommendations for the ‘relooking’ and properly reexamining the relevance of SOEs
taking into consideration that they cater for the needs of various social strata.
