Governance of state-owned enterprises in South Africa: enhancing performance, efficiency and service delivery

Abstract

South Africa has used State-owned enterprises (SOEs) for economic development, in particular to expand productive capacities and foster economic growth. The first major SOE, the Electricity Supply Commission (Eskom), was established in 1923 to support industrialization while taking advantage of the vast coal resources that the country possessed. Eskom was followed by other entities such as Telkom Limited (wireline and wireless telecommunications provider) and Rand Water (a water utility) in the first decade of the twentieth century, which became the powerhouses of the economy. At various times, these entities suffered governance and operational weaknesses and the Government came under intense pressure to privatize them in the 1960s; however, the two-pronged objective for SOE establishment, which is socioeconomic development and financial sustainability, made it difficult to heed the privatization calls. Furthermore, under the apartheid era, these SOEs were in the service of a small white minority – a key constituency for the apartheid era Government – either through reserving jobs for white South Africans or nurturing a racially exclusive entrepreneurial class.