The holding company model as a governance tool to revive South Africa's state-owned enterprises: insights from Singapore

Abstract

This mini dissertation examines the critical role of state-owned enterprises (SOEs) in the South African economy, highlighting the persistent challenges they face, including corruption and political interference. It recognises that such challenges warrant an urgent solution to revive South Africa's SOEs so they can continue their vital duties in the national economy. The research analyses the legal frameworks governing SOEs, which consist of the Constitution of the Republic of South Africa, founding legislation, such as the Companies Act, the Public Finance Management Act, and voluntary governance codes such as King IV, in a bid to establish the gaps within the framework that weaken its governance of SOEs, resulting in their poor performance. The study further evaluates various ownership and control models that might be adopted to revive South African SOEs, identifying their respective advantages and limitations. The state holding company model, as proposed in the National Enterprises Bill, is assessed in particular for its potential efficacy. This model is critically juxtaposed with Singapore's Temasek Holdings framework, widely regarded as the benchmark for centralised state ownership. The study identifies the factors contributing to Temasek's success, such as its commercial orientation, while also cautioning against adopting the model without necessary adjustments to accommodate contextual differences between South Africa and Singapore. It concludes that South Africa requires a tailored approach that comprehensively addresses its unique socio-political and governance challenges. Specifically, since the Temasek model primarily suits commercially driven SOEs, a twin-track model is identified as capable of bridging the governance gap for non-commercial SOEs that might arise from adopting the Temasek model. This study thus argues for a hybrid ownership and governance framework that aligns with South Africa's developmental objectives and institutional realities.