Corporate Governance Solutions to Business Failures in South African Parastatals

Parastatals are a critical component of the country's economic growth. As a consequence of weak governance, the largest South African parastatals are today mired in financial difficulties. They have been struggling for over a decade. The primary objective of this study was to create corporate governance systems to improve the overall financial performance of parastatals, hence contributing to South Africa's economic success. The stepwise econometric modelling was used to analyse corporate governance data for DENEL, South African Airways, SABC, Eskom, and Transnet from 1996 to 2018. The study indicated that insufficient corporate governance and high corruption levels are linked to low financial performance in parastatals. Corporate governance and business confidence levels were found to have an effect on the performance of parastatals in South Africa. Study findings show that there is a significant need to safeguard parastatals by establishing strong governance standards and keeping intact governance structures as methods to sustain business confidence and minimize corruption levels. There is need to improve accountability, audit systems and control mechanisms to improve financial performance of parastatals.