Examining integration of artificial intelligence into corporate governance in South African state-owned businesses

Abstract

African state-owned enterprises there has been little to no consideration of incorporating artificial intelligence into corporate governance to address the existing challenges within SOEs. SOEs in South Africa face numerous challenges hindering their effectiveness and sustainability. These include financial instability due to poor management and rising debt, pervasive corruption and governance issues, and operational inefficiencies stemming from outdated infrastructure and bureaucratic red tape. Political interference disrupts their ability to function independently, while human resource challenges like skills shortages and nepotism further weaken their operations. Additionally, SOEs struggle to compete with more efficient private sector companies, impacting service delivery and economic growth. Complex regulatory environments add to these difficulties. Considering the continuous technological advancement, it should come as no surprise that AI has the potential to revolutionise the management of SOEs. Predictions suggest that AI will soon be integrated into corporate boardrooms, becoming a cornerstone for gaining competitive advantage through strategic management and operational decision-making. Furthermore, AI may soon augment human governance boards, aid decision-making and executing digital strategies. This signifies a significant shift towards AI-enabled governance in the corporate world. Hence this mini thesis examines how AI can enhance corporate governance of SOEs and SOCs, specifically focusing on the potential advantages that AI could offer in SOEs and SOCs decision-making. The central research question which the thesis sought to answer is: in what ways may the integration of artificial intelligence (AI) into corporate governance enhance corporate performance, accountability and decision-making? The thesis has argued that while AI is an important enabler for strengthening governance within South African SOEs, AI should be integrated as a decision-support mechanism that complements human decision-makers, and should not necessarily replace human oversight and fiduciary responsibility. To ensure that AI adoption aligns with constitutional and ethical requirements, urgent legal reform, streamlined institutional oversight, and capacity-building within SOE leadership are essential