Appointing current or former politicians to the boards and as executives of state-owned entities (SOEs) is one reason why so many African SOEs have chronically failed to deliver on their mandates.
It has led to the politicisation of the management of these companies, resulting in political and self-enrichment objectives, rather than the delivery of quality services.
It undermines good corporate governance, accountability and productivity and, inevitably, corruption rears its head.
It also saps the morale of employees, introduces toxic organisational cultures and drives away talent.
In too many cases in Africa, politicians appointed to boards have no specialised skills beyond having been in politics or being connected to governing party leaders.
Since the end of colonialism, the organisational culture of many African governing parties has been patronage-based, factional and patriarchal.
Many leaders who come through the ranks of governing parties imbibe this way of doing things.
When such leaders are appointed to elected positions in governments or SOEs, they transfer this culture to the government and SOEs.
It can lead to the politicisation of boardrooms, and making critical decisions based on party, faction and self-interest.
SOE boardrooms end up becoming spaces where factional politics are played out.
They often gate-keep appointments for boards and executives, channelling contracts to politically connected companies, and push projects which are unsustainable or do not fit within the mandate of the business, but are politically motivated.
Political appointees on SOE boards and in executive positions can often not be challenged, as they bring the weight of the governing party to bear in boardrooms.
In some cases, going against them can mean not only being fired, but being blacklisted from working for any other SOE.
This means the views, decisions and actions of politically connected SOE board members and executives often go unchallenged, even if they are not in the best interest of the organisation, undermine performance or are corrupt.
As a result, political appointees to management and boards cannot be held accountable by the rest of the board or management.
They can only be held accountable by the governing party leadership – who in many African countries often value loyalty to their party and leader over everything else.
Political appointees to SOE boards and management also bring their political baggage with them – their acolytes, their political enemies and their corruption cases.
This means that SOEs managed by political appointees often see a replay of the political fights, the corruption and the incompetence that follow them.
Other African governing party leaders, especially liberation and independent movement ones, have rigid ideological views on the role of SOEs.
Ruling parties such as South Africa’s ANC, Namibia’s Swapo and Algeria’s FLN, often see SOEs not only as sites of patronage but as the only legitimate companies to deliver public services and provide jobs – not the private sector.
They believe that SOEs must therefore be kept afloat at all costs, even if they are inefficient, corrupt and their services and products costly.
They do not really care whether SOEs are efficient or profitable, as long as they provide jobs or public services or patronage.
Invariably, they also undervalue the role of board members as providing accountability for SOEs being managed responsibly, honestly and efficiently – and they oppose other managers or board members, who underline the need for SOEs to be run efficiently, honestly and profitably.
There has to be a wall between party politics and the state or SOEs.
Appointing active politicians to SOEs breaches the wall between politics and the state – and make SOEs accountable to the party, rather than delivering on their public mandate and to their consumers.
In many countries former politicians are appointed to public sector entity boards.
They are normally appointed on the basis that they are fully retired from party politics, and have specialised skills acquired in non-political careers – such as being accountants, doctors or lawyers.
However, in some African countries, many governing party leaders are career politicians.
Many have never managed anything outside of party politics. The majority do not have specialist or technical or business skills – a basic requisite to manage complex SOEs.
A key reform to improve the effectiveness of African SOEs is to ban politicians from appointments to boards and managements.
This is the only way to prevent the politicisation of SOEs – which is at the heart of their corporate governance failures such as high levels of corruption.
Appointments to boards and managements of African SOEs should be removed from politicians, should be professionalised and should be transparent. Appointments should be based on merit, competence and appropriate practical experience.
If not, these crucial companies will continue to fail to deliver on their mandates, to be hotbeds of corruption, and to be a drain on public finances.
- William Gumede is associate professor, school of governance, University of the Witwatersrand, and author of ‘Restless Nation: Making Sense of Troubled Times’.