The impact of partial framework implementation and noncompliance with corporate governance and performance of SOEs in Zimbabwe

Abstract

The effective governance of State-Owned Enterprises (SOEs) is critical to enhancing public sector performance and advancing Zimbabwe’s broader socio-economic development agenda. However, the persistent underperformance of these entities has largely been attributed to the fragmented implementation and inconsistent enforcement of statutory corporate governance frameworks. This study examines the economic and operational costs associated with non-compliance with the Public Entities Corporate Governance Act [Chapter 10:31] and the National Code on Corporate Governance. Anchored in a positivist research paradigm and employing a deductive research approach, the study utilises a quantitative panel-data analysis of 20 Tier 1 parastatals over the period 2018–2024. Secondary data were sourced from Auditor-General reports and Ministry of Finance records to construct governance and performance indicators, including an audit compliance index and a board independence ratio, as proxies for governance quality and fiscal impact. The empirical findings provide evidence of institutional decoupling, whereby public entities formally adopt governance structures to secure regulatory legitimacy while preserving entrenched internal practices that undermine accountability and performance. This disconnect between formal compliance and operational behaviour facilitates systemic fiscal leakages, procurement irregularities, and weak financial oversight. The results further reveal that the costs of non-compliance manifest through persistent fiscal burdens on the national treasury, recurrent government bailouts, operational inefficiencies, and diminished public service delivery outcomes. The governance failures not only erode organisational performance but also constrain fiscal space and undermine broader macroeconomic stability. The study, therefore, emphasises the need for strengthened regulatory enforcement mechanisms, transparent and merit-based board appointment processes, enhanced accountability systems, and the incorporation of personal liability provisions for governance breaches. Such reforms are essential for improving institutional effectiveness, safeguarding public resources, and promoting sustainable economic development within Zimbabwe’s evolving governance and fiscal landscape.