The power of State-owned enterprises in the Middle East, Africa, and Asia-Pacific

State-owned enterprises (SOEs) are among the most influential economic actors across the globe. Unlike private corporations, SOEs are owned wholly or partially by governments, and they often serve a dual role: advancing commercial interests while fulfilling broader national objectives. From managing natural resources to ensuring access to essential services, SOEs frequently operate at the intersection of business strategy and public policy.

In regions such as the Middle East, Africa, and Asia-Pacific, SOEs play particularly prominent roles in shaping national development, promoting economic resilience, and extending state influence into global markets. This blog explores the function of SOEs in these regions, highlighting how governments leverage them to drive growth, secure strategic assets, and achieve socioeconomic goals.

Understanding the role of SOEs

SOEs are typically established to achieve outcomes that private markets may not deliver effectively on their own. These can include:

• Ensuring national control over critical resources, such as oil, gas, or minerals.
• Providing essential infrastructure and services, including electricity, water, and transportation.
• Promoting industrialisation and diversification in economies reliant on a single sector.
• Supporting employment and social stability by maintaining jobs and subsidised services.
• Extending geopolitical influence through international investments and partnerships.

While their roles vary depending on political systems, governance structures, and market conditions, SOEs remain a cornerstone of state-driven development strategies in many emerging and resource-rich economies.

The Middle East: Energy, diversification, and sovereign ambitions

The Middle East is home to some of the world’s most powerful SOEs, particularly in the energy sector. National oil companies (NOCs) such as Saudi Aramco, QatarEnergy, and Abu Dhabi National Oil Company (ADNOC) dominate global energy markets. These firms not only provide vast revenues for their governments but also act as levers for foreign policy and domestic economic planning.

1. Revenue generation and fiscal stability
   Hydrocarbon SOEs remain the backbone of state budgets in many Middle Eastern economies. For instance, Saudi Aramco’s dividends fund significant portions of Saudi Arabia’s fiscal expenditure, including investments in infrastructure, defense, and social programs.
   
   
2. Economic diversification strategies
   Recognising the risks of overdependence on oil, governments are increasingly using SOEs to spearhead diversification. Through vehicles such as Mubadala Investment Company in the UAE and Public Investment Fund (PIF) in Saudi Arabia, states invest in renewable energy, tourism, technology, and logistics to prepare for a post-oil future.
   
   
3. Global influence and strategic investments
   SOEs extend the geopolitical reach of their governments. QatarEnergy’s global LNG projects and ADNOC’s partnerships in Asia and Europe strengthen both economic ties and political influence.

However, challenges remain: SOEs in the region often face criticism over efficiency, transparency, and dependence on government support. Reform agendas, such as Saudi Arabia’s Vision 2030, highlight the push to modernise governance structures and introduce private capital into previously state-dominated sectors.

Africa: Balancing development goals with governance challenges

Across Africa, SOEs play a vital role in managing resources, delivering services, and driving development. Governments often turn to SOEs where private sector capacity is limited, especially in infrastructure and utilities.

1. Natural resource management
   Many African economies rely heavily on state-owned oil, gas, and mining companies for revenue. For example, Sonangol in Angola and PetroSA in South Africa control significant portions of their national energy sectors. These firms often serve as gatekeepers for foreign investment in extractive industries.
   
   
2. Infrastructure and public services
   SOEs are also central to delivering electricity, transportation, and telecommunications. Companies like Eskom in South Africa and Kenya Power illustrate how governments use SOEs to ensure public access to vital services, though financial mismanagement and operational inefficiencies have sometimes led to crises.
   
   
3. Developmental state aspirations
   In several African countries, SOEs are viewed as tools for industrialisation and economic transformation. For instance, Ethiopian Airlines,  one of Africa’s most successful SOEs, not only generates revenue but also supports tourism, trade, and regional integration.

Yet, governance issues remain a significant obstacle. Corruption, political interference, and lack of accountability have undermined the performance of many African SOEs, turning them into fiscal burdens rather than engines of growth. Recent reforms, including privatisation drives in Nigeria and restructuring efforts in South Africa, demonstrate an increasing recognition that efficiency and transparency are critical for SOEs to fulfil their developmental potential.

Asia-Pacific: Innovation, industrial policy, and global competitiveness

The Asia-Pacific region presents a more diverse picture of SOEs, ranging from the giants of China’s state sector to the smaller, specialised enterprises in Southeast Asia. SOEs here are not only instruments of public service but also highly competitive players in global markets.

1. China: State capitalism at scale
   China’s SOEs—such as Sinopec, China National Petroleum Corporation (CNPC), and China Mobile are pillars of the country’s economic model. They dominate key sectors, benefit from preferential access to credit, and implement government industrial policies. At the same time, China has pushed reforms to make SOEs more market-oriented, balancing profit motives with national objectives like technological self-sufficiency and global expansion.
   
   
2. Southeast Asia: Nation-building through SOEs
   Countries such as Singapore, Malaysia, and Indonesia rely on SOEs to drive economic growth and international competitiveness. Singapore’s Temasek Holdings and Government of Singapore Investment Corporation (GIC) are world-renowned sovereign wealth funds that exemplify strong governance and long-term planning. In Indonesia, SOEs in banking, energy, and transportation are central to infrastructure expansion and poverty reduction.
   
   
3. Pacific economies: Public service and resilience
   In smaller Pacific island states, SOEs often provide critical services - such as power, water, and transport - that private firms find unprofitable. While these enterprises may not generate large profits, they ensure social stability and resilience in vulnerable economies.

Opportunities and challenges

Across the Middle East, Africa, and Asia-Pacific, SOEs share common opportunities and challenges:

• Opportunities
  • Driving large-scale infrastructure development.
  • Advancing energy transitions and climate goals.
  • Acting as vehicles for industrial upgrading and technology transfer.
  • Enhancing state revenues and fiscal capacity.
• Challenges
  • Risk of inefficiency and financial losses due to political interference.
  • Corruption and weak accountability structures.
  • Tensions between commercial viability and social objectives.
  • Vulnerability to global market fluctuations (e.g., oil price shocks).

Governments that succeed in leveraging SOEs typically implement robust governance frameworks, ensure transparency, and balance profit-making with broader socioeconomic goals. The experiences of Singapore and Ethiopia show that well-managed SOEs can thrive globally, while the struggles of entities like Eskom highlight the dangers of poor oversight.

SOEs on ClarifiedBy

ClarifiedBy provides users with a clear and easy way to identify whether an organisation is fully or partly state-owned and allows users to explore the ownership structure in more detail. We provide:

• Visibility of whether an organisation is state-owned and how many connections there are, up to 6 degrees away, to one or more governments within the Middle East and/or Africa.
• Percentage ownership between each organisation relationship.
• An interactive diagram which can be adjusted to show ownership connections for one or multiple government connections, if applicable.

The future of SOEs

State-owned enterprises remain indispensable tools for governments in shaping their regional economies. In the Middle East, they are vital to diversification strategies and global energy leadership. In Africa, they balance the dual goals of resource management and service delivery, though governance challenges persist. In Asia-Pacific, SOEs embody state-led industrial policy and global competitiveness, with varying degrees of success.

Ultimately, the role of SOEs is not fading, it is evolving. As global economies confront challenges such as decarbonization, digital transformation, and geopolitical fragmentation, governments are likely to continue relying on SOEs as strategic instruments. The extent of their success will depend less on their ownership structure and more on the governance, vision, and accountability frameworks that guide them.