South African Rail Crisis

How Governance Failures Messed up SA’s Passenger Rail Agency

Picture: SIYASANGA MBAMBANI

The Passenger Rail Agency of SA (Prasa) is going through serious turbulence that’s symptomatic of broad corporate governance failures within the country’s state-owned enterprises (SOE). Its acting CEO was recently fired by the board following allegations that he raised his remuneration by more than 350%. Shortly afterwards, the minister of transport dissolved the board. The Conversation Africa’s business and economy editor, Sibonelo Radebe, asked Rhodes Business School professor Owen Skae to explain the causes.

SIBONELO RADEBE: What went wrong in the governance of Prasa?

OWEN SKAE: This is just another example of the shareholder undermining the board, something that’s becoming an all too common dynamic within SA’s SOEs. The trend can be seen in the frequent chopping and changing of SOE boards over the past few years. Names that come to mind are South African Airways, Airports Company of SA, and arms manufacturer Denel.