Leadership Effectiveness and Sustainability of State-Owned Enterprises

Introduction

The vital economic role that SOEs play in a country cannot be under-emphasized. This is the reason why most African governments have established SOEs bodies through legal means so that they can take part in activities of a commercial nature that they make significant contributions to national economic growth. SOEs have, however, failed to play this economic role in many African countries. Irrespective of SOEs failing to meaningfully play the above-described role, they are still considered an important instrument in any government toolbox for societal and public value creation, given the right context (Price Waterhouse Coopers (PWC), 2015). In other words, wherever SOEs have been established, governments had a noble purpose of coming up with a business arm of the state which is semi-autonomous, and these institutions would be operated on a real business model that would enable them capable of making significant contributions to the growth of national economies. In many cases, SOEs in Africa have failed to live up to the expectations described above, hence the need to explore this problem and try to figure out where the problems lie. Mutize and Tefera (2020) recount that African governments, during the wave of privatization, retained control of critical sectors in the energy, rail transport, broadcasting services, and telecommunications, to mention a few examples, and this created some governance issues which may be attributed to the failure of SOEs to live up to national and stakeholder expectations of their contributions to the growth of national economies.

The focus of this chapter is SOEs’ leadership effectiveness and the sustainability of SOEs in Africa. In most SOEs in Africa, leadership is characterized by poor leaders who are not visionary, leaders who cannot excite subordinates to achieve the impossible, and leaders incapable of having the external energy, and inner strength to face challenges in the turbulent environments in which they currently operate. Many leaders in SOEs in African countries lack the mental agility that enables them to make effective decisions. The leaders also do not allow their team members grow and carry out tasks without interruption as they cannot relinquish and delegate power to their team members. The leaders in several SOEs cannot tap into employees’ souls and are not emotionally intelligent to enhance subordinates’ confidence by understanding and dealing with their emotions and concerns. Leaders in SOEs do not reflect the ability to adapt their leadership styles to the needs of the situation and people (Erasmus, Loedolff, Mda & Nel, 2015; Gie, 2021; Lazenby, 2015; Henrikse & Hefer-Hendrikse, 2012).

Most leaders in SOEs are appointed on a political ticket, and there is a lot of political interference in decision-making in these bodies, which makes it very difficult for governance issues to be adhered to (Mutahaba, 2012). There are several examples of SOEs which have experienced a lack of leadership effectiveness and sustainability in the Southern African region such as Air Namibia, South African Airways (SAA), Zimbabwe Electricity Supply Authority (ZESA), Road Construction Company (RCC) of Namibia, Namibia Broad Casting Corporation (NBC), South African Broad Casting Corporation (SABC), TransNamib and ESKOM, to mention a few examples, showing that a lack of leadership effectiveness is an Achilles heel to most SOEs in African countries. To address this gap, this chapter examines the possible influence of leadership effectiveness on SOEs’ sustainability.

The remaining sections and/or subsections of this chapter provided the required information on the background, current status quo of leadership in SOEs and a set of tests that SOEs must pass, leadership issues in SOEs, sustainability issues in SOEs, meaning of leadership, leadership approaches for SOEs effectiveness, future research directions, and conclusion.