Financial Sustainability of South African State-Owned Enterprises: A Case of Limpopo Economic Development Agency

London Journal of Research in Humanities and Social Sciences
Volume | Issue | Compilation
Authored by Ramadimetja Catherine Masekoameng , Zwelibanzi Mpehle
Classification: FOR Code- 149999
Keywords: financial performance, financial management, financial sustainability, state owned enterprises, economic responsibility.
Language: English

The South African State-Owned Enterprises (SOEs), as institutions partially or fully owned by the state established to contribute to the country’s economic recovery and to ensure enterprise and innovation opportunities, have an obligation to effectively manage their finances. In order for these institutions to meet their social and economic responsibility which, inter alia, encompasses growing the country’s economy and creation of job opportunities for citizens, have to be financially sustainable to compete profitably with other organisations and mitigate business risks that might hinder the expansion of enterprises. It therefore becomes imperative for these institutions to cogently apply commercial principles so as to enhance their financial self-sustainability.

However, the country’s SOEs ad infinitum require financial bailout from government, and the Limpopo Development Agency (hereafter referred to as LEDA) is no exception. It is upon this premise that this article seeks to establish if the LEDA is effectively improving its financial performance in order to meet its statutory obligations. The study utilised a qualitative research approach, and primary data was gathered through face-to- face interviews with eleven LEDA officials comprising the Board of Directors, middle managers, senior and executive management using a semi-structured interview schedule. These 
respondents were purposively sampled because of their positions as they play a pivotal role in the financial management of LEDA. The results revealed that LEDA has the potential to sustain itself financially if it could strengthen revenue management systems, minimise costs and obtain additional funding to implement feasible financial sustainability projects.


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