Can state owned entities deliver on their developmental mandate? : acase study of Eskom and Transnet

Abstract

This article explores the key challenges facing state owned entities (SOEs) in South Africa in meeting their developmental mandate. Furthermore, it investigates how the challenges impact on their financial sustainability in pursuance of their development mandate. It does this through a case study of two key SOEs which are housed under the Department of Public Enterprises (DPE), namely, Eskom and Transnet. The article is influenced by a position paper which was published in January 2012 by the African National Congress (ANC). In this paper, the ANC stresses the need to intensify the role of Development Finance Institutions (DFIs) and State-owned Enterprises (SOEs) as instruments for significantly advancing the levels of economic transformation within South Africa. The discussion paper was adopted and a resolution was passed at the ANC 53rd Conference held in Mangaung, in the Free State Province in 2012. The ANC resolution states that “the ANC and its government must build the capacity of the state in order to pursue the objectives of a developmental state and to ensure that whilst SOEs and DFIs remain financially viable and profitable; their primary responsibility is to support and lead in strategic government-led developmental objectives within the realm of a clearly defined public mandate of pursuing an overarching industrialisation programme” (African National Congress, 2012). A qualitative empirical approach was used, and seven key informants’ interviews were transcribed and coded, to ascertain the key domains and challenges of SOEs with South Africa. Various challenges were cited including legislation, corporate governance, governments commitment, general structures and processes related to SOEs. A need exits to implement recommended structural changes cited for SOEs development.