Corporate Ownership & Control / Volume 12, Issue 4, 2015, Continued - 2 273 RETHINKING A PARADIGM SHIFT IN THE MANAGEMENT OF STATE ENTERPRISES AND PARASTATALS: THE AFRICAN CONTEXT Daniel Chigudu* Abstract African States have privatised and commercialised some of their entities in the mould of state enterprises and parastatals (SEPs) which constitute significant parts of market capitalisation, employment and GDP.SEPs are charged with the administration of utilities such as electricity and telecommunication that affect the populace. The state as an active owner is obliged to ensure effective leadership and professionalism in the SEPs. Challenges to improve services and politicised board appointments indicate the need to entrench good leadership and corporate governance in an age of austerity. The thrust of this paper is a paradigm shift from the traditional management to effective leadership, a vital cog for SEPs as they strive to deliver more with less on time and on budget. Keywords: State Enterprises and Parastatals, Paradigm Shift, Transformational Leadership * Department of Public Administration and Management, Bureau of Market Research (BMR), P.O. Box 392, Pretoria, South Africa 1. Introduction State enterprises in Africa are either called state owned enterprises (SOEs) or government owned enterprises. They are completely different from government ministries and departments in terms of structure and administrative functions. State enterprises are created to function as companies in terms of the Companies Laws of a given country but government having a significant degree of control and ownership. They are wholly or partially owned. Parastatals as derived from “Para-state” are quasi- government public corporate bodies wholly owned by government and set up as specific entities. However, they are given sufficient autonomy and with their jurisdictions and legislations varying from one country to another. Government exercises its rights and responsibilities over them and they are created without shareholders. There is a thin dividing line between state enterprises and parastatals. State enterprises and parastatal (SEPs) leaders in Africa face challenges when responding to the twin pressures of providing more customer-focused services while reducing spending at the same time. As a result, what appears to be a trend in many public organisations (SEPs included) in developing and emerging economies is that organisations perform below the expected standard (Mankins and Steele, 2005). Leslie and Canwell (2010) suggest that the solution is a paradigm shift from the ‘traditional focus on raw intellectual talent and development programmes’ to one that will liberate leadership at all levels. Here activities must define leadership and not one’s position. It must be performed, driven and dealing with wicked problems as seen by Grint (2005). Based on these definitions the focus needs to be on leadership capabilities as opposed to top leadership roles. There is need for leaders of SEPs to effectively use available information to answer questions that make the organisation learn while avoiding punishing followers for genuine mistakes. There is need for a paradigm shift from management to leadership, and to SEPs leaders who match the organisational and community profile across gender, cultural diversity and other attributes. Effective leadership involves handling information which is potentially damaging through rapid analysis of situations (Leslie and Canwell 2010) and building a stock of effective questions. There is need to protect the SEPs when genuine mistakes are made and let the organisation learn from such mistakes and not to create a climate of punishing for all mistakes. Otherwise followers will hide the errors and retard the growth of the institution. SEPs have a residual culture from the public sector in which participants in meetings often have to wait for the most senior person to speak first. Although it may be convenient, leaders are better advised to get views of the participants even when they believe they have the answer to the problem. This reduces some leadership burden that many leaders carry under the guise of positional power and authority. Leslie and Canwell (2010:303) corroborate, “Leaders emotional intelligence matters. They need to bring their own strengths, values and personality to the role and use them to get the team’s buy-in, which can help to reduce the turnover of talent.”