Abstract
Whilst some literature is of the view that; it is nearly impossible to cultivate good corporate governance culture in state-owned enterprises (SOEs), others believe that new strategies of implementing corporate governance systems together with political will can deliver SOEs out of their efficiency doldrums. This paper presents a scientific analysis of the contentious view on the possibility of creating efficient governance mechanisms in SOEs, explores the effective cost for governance failures in SOEs in Kenya, Zimbabwe, South Africa and Ethiopia. The paper makes conclusions and recommendation that the determinant factor to the success of SOEs in African countries is underpinned on the response of central government to the challenges of SOEs. Structural reforms, good governance, clear objectives and efficiency requires governments to take a decisive position. As a lasting remedial action, knowing which entities and when to offload them through privatisation, is an option in addressing the governance challenges in African SOEs. For strategic SOEs, the paper recommends that governments should consider listing them on public stock exchanges.
Highlights
IntroductionThe economic strategy to retain some companies as StateOwned Enterprises (SOEs) was to provide services to the vulnerable members of the society
After 1980, most African countries had attained independence from former colonisers and their new administration where under pressure to address inequalities, avert poverty and changing the fortunes of their population at the same time growing their economies
The analysis further considers aggregate data from the World Bank Report (2018) Energy Sector Management Assistance Program on StateOwned Enterprises (SOEs) performance which presents 12 West African countries, 62 percent of which are operating at a loss and 36 percent are in a state of technical insolvency with a negative net worth
Summary
The economic strategy to retain some companies as StateOwned Enterprises (SOEs) was to provide services to the vulnerable members of the society. The majority of SOEs have not been successful in playing their economic role due to low performance compared to private enterprises (Organisation for Economic Co-operation and Development (OECD), 2018). Further to their failing role, SOEs in Africa are accused of many ills such as monopolising certain sectors, sabotaging of structural reform programmes, gross inefficiencies, poor corporate governance, battleground of political games and being conduits for corruption. Governments are forced to offer financial support, which has weighed the fiscal down at the same time driving government debt up (Balbuena, 2014)
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