Governance issues and state capture at Eskom and Transnet : a Kingdon’s multiple streams theory for policy studies

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.