Examining the determinants of poor performance in South African state-owned entities : a qualitative analysis

Abstract

South African State-Owned Entities (SOEs) play a critical role in economic and social transformation, especially post-1994. However, instead of being at the forefront of social and economic transformation, most SOEs have been associated with financial mismanagement, state capture, and major governance failures due to inefficiency and weak accountability and inefficiency. This research addresses why SOEs, which should drive public service and economic development, consistently perform poorly. Since SOEs performances continue to deteriorate, it is important to investigate the main determinants/causes of this deterioration. This ensures that the government develops and employs up-to-date and effective methods in dealing with current challenges contributing to the poor performance of SOEs. The study employs a qualitative research design to explore the factors contributing to poor performance in selected South African state-owned entities (SOEs). The study uses a case study approach to gather data from selected SOEs, focusing on in-depth interviews, document analysis, and review of existing SOE performance reports. Data was analysed through thematic analysis, identifying patterns and key themes in governance, financial performance, and operational challenges that impact SOE efficiency and effectiveness. While ethical considerations employed ethical standards to ensure confidentiality and managing any sensitivities related to public sector critique. Key performance metrics include financial stability, service delivery, and governance practices. The main findings of the study reflect, amongst others, Operational and Financial Challenges: SOEs face significant governance issues due to political interference, poor internal controls, and lack of strategic alignment with their public mandate and Systemic Issues: The bureaucratic structure, political patronage in appointments, and complex regulatory environment hamper performance, leading to inefficiency and poor financial outcomes. The study concludes that while South African SOEs are essential for public service and economic goals, they are compromised by political interference, misaligned objectives, and governance challenges. Recommendations are provided for policy reforms, governance improvements, and performance management updates to address these issues.