Social agents in commercial hats: understanding the South African approach to state ownership and the reform agenda

What the paper says

Purpose Until recently, state-owned enterprises (SOEs) in South Africa have been organised under the decentralised and centralised models. The SOEs under the centralised models were recently transferred to their various departments and are now under the oversight of their respective ministers. As the state ponders reforming the ownership and organising models of the SOE sector, a lot of things are at stake, and the reforms must be effective for the state to be financially sustainable. In this context, the purpose of this study is to contextualise South African SOEs within their institutional and developmental framework, emphasising their dual function as both economic and social entities. Design/methodology/approach This study uses a qualitative institutional analysis, drawing on document analysis of policy documents, legislation and academic literature, supported by subject-matter expertise to provide an institutional socio-economic analysis of South Africa’s approach to state ownership. Findings It argues that although South African SOEs have both commercial and social obligations, they are more of social agents delivering public goods and services and supporting developmental agendas both in South Africa and in other African countries, especially with regard to state-owned development financial institutions in terms of the latter point. Conceptually, this paper frames South African SOEs as “social agents in commercial hats”, extending debates on state capitalism, public value and developmental state models by highlighting the hybrid tensions that emerge when developmental mandates are layered onto commercial logics. Thus, considering that their mandate is to focus on more social and less commercial issues, they should be structured in such a way that permits them to achieve their goals without frequent state bailouts. We make recommendations in line with this, highlighting the pros and cons of the available ownership and organising models. Originality/value Considering the ongoing debates regarding the structural models with which South Africa’s SOEs may be reformed, this paper represents not only a timely piece that may guide policy and practice but also updates the literature on ownership, organising of SOEs and management of SOEs in South Africa.