Exploring competency requirements for the selection and appointment of board members and chief executive officers of state owned entities in South Africa

Abstract

Orientation: State owned enterprises or entities (SOEs) are considered as influential and growing globally at an alarming rate. According to PricewaterhouseCoopers (PwC, 2015) SOEs among the Fortune Global 500 companies grew from 9% in 2005 to 23% in 2014. PwC (2015) further identified the following eight countries as having the highest SOE shares in the world in terms of sales, assets and market values: Brazil, China, India, Indonesia, Malaysia, Russia, Saudi Arabia and the United Arab Emirates. Although South Africa is not counted among these countries, it forms part of the BRICS countries together with Brazil, China, India and Russia. Countries across the world are guided by various laws, regulations, and policy frameworks in terms of managing their SOEs. The Organisation for Economic Co-Operation and Development (OECD) in particular developed guidelines on corporate governance of state owned enterprises (OECD, 2005) aimed at empowering member states to deal with their corporate governance challenges. As part of the global world, South Africa is therefore not immune from experiencing similar corporate governance challenges as other countries. The need to conduct this study was prompted by the challenges that are faced by SOEs in South Africa, particularly those that have received ongoing negative press coverage, faced a backlash from organised labour and political principals and been hauled before a multitude of commissions of inquiries and cabinet committees. A handful of SOEs have been reported as having huge corporate governance challenges. These include ESKOM, the Passenger Rail Agency of South Africa (PRASA), the South African Broadcasting Corporation (SABC), Transnet, the South African Revenue Service (SARS) and the Public Investment Corporation (PIC). According to media reports and various commissions and committees, the challenges facing thse SOEs include corruption, maladministration, corporate governance, political interference, a lack of proper skills, and poor performance and financial management.