Aim: To identify competencies important for effective nursing management and to assess managers' proficiency therein. Background: A lack of management capacity has been identified as the key stumbling block to health delivery in South Africa. Despite nursing managers being central to overcoming the challenges facing health care, there has been a paucity of research that empirically evaluates their skill levels. Methods: A survey was conducted among 171 senior nursing managers in South Africa using a self-administered questionnaire. Results: Public sector managers assessed themselves as being relatively less competent than private sector managers. The largest skill gaps for public sector managers were for 'ethico-legal', 'task-related' and 'controlling' skills whereas those for private sector managers were for 'ethico-legal', 'health-related ' and 'task-related' skills. Conclusions: This research confirmed the lack of management capacity within the health sector and identified areas in which the skills deficit was most significant for both the public and private sectors. Implications for nursing management: These findings reflect the needs of nursing managers and will be useful in the conceptualization, design and delivery of health management programmes aimed at enhancing management and leadership capacity in the health sector in South Africa. © 2010 The Author. Journal compilation © 2010 Blackwell Publishing Ltd.