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Saturday 19 January 2019
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Ruffling SOE feathers

There is a dark cloud hanging over the country’s economic system, a situation partly caused by parasitic parastatals that always crawl to Treasury for a bailout.
 
Namibia’s love for parastatals is not a new thing, the problem is the fact that parastatals have often been established to create patronage based jobs instead of establishing entities to represent the interests of government in certain sectors.
 
This week finance minister was clear when he met SOE bosses.
He told them: “Budgetary bailouts from the Central Government shall not be perceived to continue in perpetuity. The Boards and management cadre of such Public Enterprises should not only develop, but implement credible business plans to effectively end perpetual bail-outs.”
 
You can imagine the look on the faces of some CEOs when the minister said that, they were literally being told that the time for moonlighting and running to big brother for a bailout are nearing the end, after all every beginning ought to have an end.
 
“In pursuit of operational efficiency and financial soundness, Government also now expects SOEs to refine their operational plans, identify its stock of underutilized capital and develop business plans for better leveraging underutilized capital assets.
Only then shall the public sector be seen to exploit efficiency gains and giving real meaning to national development interventions.”
These are models that experts and analysts have long vouched for but their advice fell on deaf ears. SOEs have the potential to lessen the burden on Treasury through taxes and dividends. Sadly it is the other way round because the performance of most SOEs-especially those in the commercial space-leaves much to be desired.
 
The failure of SOEs are a clear signal that officials are not committed to seeing their companies succeed. After all, it is perplexing to many how SOEs run by well-qualified officials are continuously in the red. That in itself shows that there is a clear lack of patriotism and will power to see state companies at the top.
Put these very same officials in private companies and you will see how they work their socks off to deliver on targets set for them.
SOEs employ close to 15 000 workers, yet service provision is often found wanting.
 
So bad is the situation that government has now opened up to public private partnership arrangements in a bid to prevent a total collapse of some SOEs.
 
The emergence of Namibia’s economic quagmire was triggered by government’s reluctance to hold SOEs responsible for the state of the respective SOEs. Often you will see that SOEs are given bailouts provided that they present turnaround plans which hardly bares fruit.
 
Since the 2008 global recession, Namibia has seen a sharp decline in the growth of strategic economic sectors, especially agriculture. State run entities are in shambles and this greatly contributed to the economic pandemonium confronting the country at present.
It is no secret that if properly managed, parastatals can play a very significant role in the economic turnaround fortunes of the country, but there needs to be willpower from all stakeholders and those who are found wanting must be shown the door.
 
The practice of severance packages should also be relooked. We still see millions being dished out to SOE bosses whose contracts have been terminated for one reason or another. Boards often choose this route to avoid long court challenges forgetting that such monies could have been used for other activities.
 
Such practices also shows that our boards are often unsure as to whether the decision they have taken are legitimate or not.
Last year the public enterprise minister announced that there are over 500 names of people vying to be appointed to SOE boards. It is encouraging to note that there are people who wish to serve their country despite the politics that comes with being on boards. That practice has often deprived the SOE sector from attracting skills because potential board members serving outside the public sector are not willing to risk their reputation by serving on boards which could be tempered with by politicians.
 
Board members have a fiduciary duty to always act in the best interest of the company and nobody else. They must declare all interests in contracts in order to ensure that such member always remains free of conflict of interest in order to exercise his/her fiduciary duty.



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