Corporate governance and performance of state-owned enterprises: case study Uganda Electricity Transmission Company Limited

Abstract

This study Attempts to explain the effect of corporate governance on performance of State Owned Enterprises in Uganda, given the country’s reform policies in 1990s that were geared at enhancement of transparency, accountability and performance of SOEs. Uganda Electricity Transmission Company Ltd (UETCL) was chosen for the study because it is among the State Owned Enterprises that emerged as a result of such reform policies. Specifically, the study set out to assess the effect of corporate governance structures, decision making, policy, corporate reporting practices and the regulatory framework on the performance of UETCL. To carry out the assessment study, extensive literature review was carried out which formed the background knowledge to the study as well as providing the necessary input to discussion of the findings from the study. Cross – sectional survey methods were conducted by means of questionnaires, document analysis and key informant interviews. The population of study included full-time employees of Uganda Electricity Transmission Company Limited. A total of 188 respondents were targeted, although during the actual data collection, 163 respondents answered the questionnaire. Respondents who participated in this study were selected randomly using a stratified simple random sampling. The data collected was coded and edited before it was fed into the computer, analyzed using a computer program called STATA. In this program, data was analyzed using frequencies, measures of central tendency, factor analysis, and correlation and regression analysis. For qualitative data was analyzed through content analysis and analysis of verbatim evidence received from key informants. The study results strongly demonstrate that board structures (such as board leadership structure, composition, and committees) are an important determinant of the organizational performance. Thus efforts are needed to enhance the board governance structures of the organization in the overall, if organizational performance is to be boosted. Furthermore, the analysis of respondent’s opinions towards Policy, decision making and corporate reporting practices and performance revealed that respondents were satisfied that the policy, decision making and corporate reporting practices significantly impact organizational performance. Statistical evidence from correlation and regression analysis revealed that policy, decision making and corporate reporting practices positively impact performance. The results actually revealed that 100 percent improvement in policy, decision making and corporate reporting practices result into 61 and 23 percent of improvement in quality of service and employee satisfaction respectively. Finally, the results suggested that regulatory framework has a significant positive effect on quality of service and employee satisfaction of UETCL. Therefore, the study indicates that the mandate that define the boards of State-owned enterprise, their roles and responsibilities need to be redesigned to address the current performance challenges. For example, formal, rigorous and transparent procedure for the appointment of new directors to the board is something that requires argent attention.