GOVERNANCE CHALLENGES IN ENSURING

Abstract

In many countries such as New Zealand and Singapore, state owned enterprise (SOE1) reform efforts had failed to deliver continued improvements in the performance of SOEs as they still did not fully address the fundamental governance challenges confronting SOEs. State owned enterprises continue to face challenges in terms of disparity in the governance frameworks existent and an inability to strike a balance between competing demands in terms of the ability to balance between the social objectives and profit maximisation to ensure the sustainability of the enterprise and the changing legislative environment within which they operate to ensure improved performance. In order to successfully conclude the process of economic transformation, the state’s ownership and privatization policies as well as the corresponding measures to implement those policies must be carefully and precisely designed in ensuring that SOEs perform. Furthermore, the role of leadership is seen as a critical factor in the governance of SOEs. This research explored the Transnet Limited case against the backdrop of SOEs restructuring in South Africa. The study illustrates that for SOEs to be competitive and efficient in their operations, it was important that they operate within a proper governance and institutional regulatory framework. It also maintains that it was essential to have continued improvements in corporate governance within the public sector to allow for effective asset management, investment policies, accountability and transparency to address ‘principal-agent’ challenges. The study further indicates that SOEs in South Africa were moving in the right direction; however they were still confronted with challenges and those challenges were similar to both developed as well as emerging markets