State owned enterprises : a policy analysis of South African Airways (SAA).

Abstract

It is said that the establishment of SOEs is a governance approach adopted by governments to promote economic growth, in order to increase government’s ability to delivery public services, as well as to help develop the state. Of late however, major State Owned Enterprises (SOEs) in South Africa have come under scrutiny, with the media accentuating their shortcomings. Malfeasance, inept leadership and mismanagement have often been cited as some of the issues that the South African State Owned Enterprises are faced with. There exists an extensive set of frameworks that guides the operations of SOEs, this is in order to make them efficient and effective. Of particular pertinence is the New Public Management approach as well as Good Corporate Governance which suggests that the commercialization of state owned enterprises will lead to making them profitable and essentially promote effectiveness and efficiency. The fact that some of South Africa’s major SOEs still fall short of fulfilling their mandate begs the questions and calls for a need for an examination of how the management of SOEs can be improved. Given the above context, this study will adopt a two-pronged approach to examine some of the challenges facing SOEs in South Africa. Using the South African Airways as its case study, mainly because for too long SAA has been a drain on South African taxpayers. Furthermore SAA, has been struggling to keep its fleet in the skies with a crippling debt of $1.5 billion and has had to receive a couple of state sponsored bailouts, including a recent 6.5 billion rands ($560 million) guarantee to keep liquidators off its back. The study will begin by conceptualizing SOEs, then move on to examining the different legislative acts and frameworks put in place to ensure the efficient and effective management of the SAA. The study will maintain that one of the major challenges faced by SAA is a problem of governance. Accordingly, the study will proceed to demonstrate how the different frameworks that exist could be implemented in order to ensure the efficient and effectiveness of SOEs in South Africa.