**1. Introduction**

Corporate governance (CG) is not new in South Africa. Private sector is ahead of public agencies in the application of CG principles despite the absence of a legal prescript that supports it. The South-African government mandates state-owned enterprises (SOEs) to steer the direction of development efforts of its emerging economy while using diverse oversight mechanisms and policies in public agencies [1]. Therefore, the government functions under the assumption that SOEs must direct

projects that advance the country's mixed economy. The advancement of the economy through SOEs productivity is supported by a free market system globally, while the SOEs activities produce bottom-up, with effective results without the involvement of the state [2]. It can be pronounced that the SA mixed economy caters for both the private and public sectors, where the public sector goal is to support the welfare of the society. The global impact of COVID-19 and Omicron spreading affected the economy, and there is a probability that it will have a global impact on the economy in 2023 also.

This chapter argues that the systematic global and local challenges impact the South-African economy. Hence, SOEs are also affected by these challenges, and they are interconnected to socioeconomic and political environmental factors that constantly influence their decision-making. This serves as the foundation for the debate on the effectiveness of social democracy in which the interaction between the market and the state through agencies is apparent. According to Armitage, emerging economies are characterized by market-based transactions influenced by political, economic, and social factors emerging from business-dominated ownership of private investors. This situation is familiar to the South African economy that is expected to provide leverage to growing parastatals owned by the state. State-owned enterprises are emerging as agencies that are managed by a board of directors that have mixed interests. In the post-apartheid era, SOEs are anticipated to persuade economic growth and distribute real public services [3]. This chapter analyzes the application of codes of CG in SOEs, on the principles of Kings Reports, which support the notion of the state, shareholders, executive, and nonexecutive managers, clients, and communities as all guardians of accountability and good governance. This chapter also focuses mainly on the challenges in the application of corporate governance by the SOEs in South Africa.

This chapter adopted a qualitative research methodology for collecting and analyzing data. Data are mainly drawn from books, scholarly accredited journal articles, reports, policies, and legislation on CG. Despite the market's current state of development and the proper alignment of the market and the state, state-owned and publicly run businesses are a working illustration of how the government uses business principles like efficiency to offer public goods and services. The SOE in South Africa are in the spotlight of public scrutiny due to their staggering performance, especially in the energy and transport sector. The SOE's outlook is coupled with inconsistencies to achieve their mandates and goals that require them to balance their costs of operations with the production to provide services to their clients.

### **1.1 Research methodology and procedures**

A qualitative document analysis was adopted. Qualitative research suits this chapter since it is based on the performance of SOEs as organizations with structures formed by policies and people who are observed and reported to perform in real-life situations. Brynard et al. ([4]:82) assert that the richness of document analysis lies in its nature of allowing the creation of themes from the transcribed filtered notes recorded from the documents being analyzed. This chapter adopted themes from current policy reports and articles on SOEs.

Literature was surveyed from other international and local cases that have applied CG in state entities and parastatals. Secondary data were drawn from various books, articles from accredited journals, commissioned studies reports, and government policies. The King I, II, III, and IV Reports and the OECD Network [5] Reports on CG
