An assessment of the relationship between corporate governance and performance of parastatals and state enterprises in Zimbabwe

Abstract

This study sought to develop a governance model to assess the impact of corporate governance on the performance of state enterprises and parastatals in Zimbabwe. The study first did a literature review on corporate government systems around the world and in Zimbabwe. The background of state enterprises and parastatals in Zimbabwe was explored to understand the problems facing these state corporations. The challenge was how to turn around the fortunes of these corporations and make them more viable through better corporate governance. The research question was: To what extent will good corporate governance in state enterprises and parastatals enhance their performance? The research used quantitative methodology for data gathering and analysis and the questionnaire was used as the research instrument. The sample contained a mixture of 20 state enterprises and parastatals covering commercial, regulatory and economic and social. A questionnaire was self–administered to the respondents and collected by the researcher after completion. The study found that there are very weak linkages between the corporate governance variables such as the role of the minister, the role of the board, board tenure, expertise and performance of state enterprises and parastatals. This means that there should be a more robust model to better understand the relationship between corporate governance and improved performance. The various recommendations made should improve corporate governance in SEPs and enhance their performance. Since some linkages were found between performance and remuneration and board composition it shows that corporate governance has some impact on performance of state enterprises and parastatals. It will be necessary in future research to develop a model which includes the contextual factors such as political, economic, social, environmental and legal. The timing of the study could also have influenced the outcome. It may be useful to carry out another study at a different time when there is no turbulence in SEPs.