Cartica Capital boss' views on state owned enterprises

The CEO & CIO of Cartica Capital, Teresa Barger, recently shared her controversial views on state-owned enterprises (SOEs) during an interview at the Annual Spring meetings of the International Monetary Fund and the World Bank Group. Barger highlighted the challenges faced by state-owned enterprises and the crucial importance of good governance in ensuring their success. She emphasized that companies controlled by their founders have significantly outperformed widely held companies and state-owned enterprises over the last decade. Barger pointed out that state-owned enterprises are particularly sensitive to commodity prices, as demonstrated by their erratic performance over the years. Barger, formerly the head of corporate governance for the World Bank and IFC, emphasized the need for separating ownership from regulation within SOEs to achieve good governance. She noted that having only political figures on boards, rather than individuals with strong business acumen, can hinder the performance of state-owned enterprises. Barger also discussed the recent decision of a major investor to withdraw their investment from South African state-owned enterprises, raising concerns about a potential domino effect in the country's investment landscape. She underscored the importance of listening to investor concerns about corporate governance and highlighted the case of Eskom as an example of political interference impacting strategic decision-making. Barger emphasized the need for state-owned enterprises to prioritize corporate governance, transparency, and minority shareholders' rights to attract and retain investment. She outlined five key areas critical for effective corporate governance: commitment to corporate governance, composition and function of the board, commitment to minority shareholders' rights, disclosure, and transparency. Barger's insights shed light on the pressing need for improved governance and strategic decision-making within state-owned enterprises to enhance their performance and appeal to investors.