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Voters queue outside in Macassar, Khayelitsha. Picture: ESA ALEXANDER
Voters queue outside in Macassar, Khayelitsha. Picture: ESA ALEXANDER

A string of corporate scandals in the 1980s and 1990s saw once-profitable companies fail, destroying billions in value. The result was a greater focus on developing and implementing better governance frameworks, among them the King report on corporate governance in SA. 

Whereas shareholders once tended to be fairly passive, mostly endorsing resolutions at AGMs, a new breed of active shareholder began to make its mark. As the owners of shares in the company, shareholders realised they had a real incentive to take a more proactive role in ensuring that the board of directors and executive team were held accountable for their actions and for the performance of the company.

While governance frameworks set the principles in terms of which the company should operate and its aims, and suggests practices to achieve them, the role of the active shareholders is to ensure the directors and management are taking the right steps by being active and engaged, and to exercise their vote at the AGM.

This is not a perfect system, but it can work provided each component does its work in good faith and with the company’s benefit in mind. The combination of committed, active shareholders and a solid governance framework can keep a good company working well, or help revitalise one that has taken missteps.

These principles, employed to guide and sustain an organisation onto the correct path, and keeping it there, can be equally well applied to a country. In many ways a country’s structure can be equated to that of a company. In this analogy parliament is the equivalent of the board of directors, responsible for setting the strategic direction and holding the executive accountable, while the president and the cabinet constitute the CEO and executive team, responsible for turning parliament’s strategy into reality on the ground.

As in a company, the president (CEO) has an outsize effect in terms of the quality of leadership offered and of “setting the tone at the top”. Cabinet ministers are the equivalent of the executive committee, with each member responsible for specific portfolios, and particularly for how allocated budgets are spent,  as well as the impact of that spend.

At the apex of the system voters loosely perform the role of shareholders. Voters have a regular opportunity to assess how well the parliament has been doing its job of setting strategy and holding the executive to account, and to make their conclusions known through how they vote in elections, which is analogous to the corporate AGM.

In accordance with constitutional provisions, President Cyril Ramaphosa has declared May 29 the date for the 2024 general election. This announcement underscores the critical importance of acknowledging the impact each South African’s vote holds. Given the relatively infrequent occurrence of elections, taking place every four years in SA, the imperative for voters to actively participate cannot be overstated.

Elections serve as a pivotal opportunity for citizens to wield influence over the political landscape, offering a means to either reward or penalise the political parties comprising parliament, the institution from which all state power emanates. While acknowledging the vastness of populations places voters somewhat removed from the direct levers of power, elections stand out as one of the few peaceful avenues through which citizens can effectively express their views.

What’s worrying is that the number of SA’s citizens voting has been falling.  From a high of about 70% in 1999, the last general election saw the percentage of eligible voters actually voting decline to 49%. This is concerning because, as many commentators have observed, it indicates frustration with the political process. Democracy itself has lost credibility.

It’s on us as shareholders in SA Inc to ensure ethical and effective leaders are appointed, and that we then take steps to ensure that they are held to account. Democracy doesn’t happen by itself — we need to practise it vigorously to make it work, and use our power as voters to drive the positive change we all want.

• Prof Natesan is CEO of the Institute of Directors in SA.

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