Mainstream Politics and the South African SOEs Dynamics
State Owned Enterprises (SOEs) in South Africa are thought to be vulnerable to debt burdens, underinvestment, depreciation of assets, weak corporate governance and systems, and are characterised by massive corruption which render SOEs effectively unprofitable, inefficient and ineffective as development facilitator tool in the economy. This article used literature review, document analysis and Key Informant Interviews (KIIs) to investigate the role of party and state politics in the affairs of SOEs in post-apartheid South Africa. Mainstream politics have effect on the affairs of SOEs. Transformation of SOEs should begin by regularising mainstream politics and its influence in SOEs environment.
KeywordsCorruption State Owned Enterprises (SOEs) Privatisation Political interference
The operational definition for SOEs in this article shall mean “state owned entities or companies which are legal entities that tend to carry out business activities on behalf of the state” (Chilenga 2016). The definition supplied by Chilenga (2016) is consistent with that of the Public Finance Management Act (Act of 1999) (PFMA), Section 1 (a), (b), (c) and (d) (i, ii) as amended by Act 29 of 1999 which describes the entities as “National Government Business Enterprise” which (a) “is a juristic person under the ownership control of the national executive (b) has been assigned financial and operational authority to carry on a business activity (c) as its principal business, provides goods and services in accordance with ordinary business principles (d) is financed fully or substantially from sources other than the National Revenue Fund or by way of a tax, levy or statutory money” (Chilenga 2016; Sadiki 2015).
According to Sadiki (2015), financial guarantees refer to undertakings by the state to pay, after the occurrence of certain events which might negatively impacted substantially on the creditworthiness of the particular institution requesting that guarantee the amount of which could be paid directly to the beneficiary or to its creditors.
A loan is money lent which has to be returned usually with interest (Sadiki 2015).
Sadiki (2015) defines state guarantee as a promise by a person (the guarantor) to settle a debt or fulfil the promise of someone else. The obligations of the guarantor in the guarantee are equivalent to those of the borrower.
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