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Sunday 21 April 2019
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NBC in crisis

The national broadcaster is out of cash and and sitting on a deficit of almost N$80 million, a situation that has since forced the broadcaster to initiate an austerity plan. It was however blocked by government five days before implementation, The Patriot can reveal.
A document dated 24 July 2017, signed by board chairman Sven Thieme, in which the plan is detailed reveals how NBC had planned to cut 145 jobs, slash broadcasting times, cut all indigenous news bulletins, abolish NBC 3,4 and 5, discontinue payment of fees to directors and limit travelling.
If it could, NBC 2 would also be up for abolishment but due to the commitment with Multichoice it is not possible.
The broadcaster, in the plan that was addressed to Minister of Information and Communication Technology Tjekero Tweya, justified the need to implement the measures because “liabilities are growing at an alarming and unsustainable rate monthly.”
The envisaged staff reduction has an associated financial implication of N$100 million, broken down into N$90 million in separation packages and N$10 million in accrued leave balances.
Sources close to the broadcaster are blaming government for the precarious financial situation in which the broadcaster finds itself and accused the line ministry of expecting NBC to cover all government events while it remains reluctant to pump more money into the entity.
The measures were due for implementation on 1 August 2017.
Tweya wrote back to the board within two days ordering the board not to implement the proposed measures until government has fully studied the measures and applied its mind on the best way forward without curtailing the mandate of the NBC.
“I appreciate your concern as a Board regarding the precarious situation in which NBC finds itself. You too will surely appreciate that most of those are past expenses that were incurred and therefore cannot be expected to be met at once in the current financial year, as they were supposed to have been honoured in those respective financial years,” said Tweya.
The outspoken minister also reminded the board that “it is criminal for anyone to deduct monies from an employee and fail to pay it over same time or month as reflected on the payslip.”
Seemingly accusing the board of also contributing to the financial woes of the broadcaster, Tweya said: “This has contributed to the current financial state of affairs and no action was taken by the Board on those employees who committed those acts.
This has been coming on for years unaddressed. This situation should have been curbed a long time ago, but was condoned and expected to be fixed within one week. It is not realistic nor is it fair.”
“Thus, no implementation of the proposed measures until the  shareholder is fully briefed of all their implications in terms of the NBC mandate of informing, educating and entertaining the nation in the spirit of inclusive access to information by all citizens,” he said.
Analysts have since suggested that the funding model of NBC needs to be overhauled. While it is a public broadcaster, only a small proportion of costs are funded by licences and the state subsidy, leaving it vulnerable to market fluctuations.
Thieme explained to Tweya that the NBC’s medical aid cover was terminated by NMC as a result of the cut in subsidy.
He said the broadcaster was forced to do business with N$10 million less per month, adding that NBC could not manage with the situation hence the repeated calls for a redress.”
The NBC operational cost for 2017/18 is estimated at N$ 345 Million, which is a reduction from N$ 369 Million which was the actual cost of operations in 2016/17, translating into a nominal reduction of 7 percent.
However, according to Thieme, considering the inflationary increase of 6.7 percent, the total effective reduction amounts to 13.6 percent.
Government has indicated N$139 million in subsidy to the NBC for the year in question, while the NBC expects to generate around N$126 Million, which makes the case for funding calculated at N$ 265 Million for the year.
Thieme said the situation will result in a budget deficit of N$80 million.
“It should be noted that the N$139 million allocation represents a reduction of over N$200 million in the last two years, with N$342 million in the 2015/16 financial year and N$252 million in the 2016/17 financial year.
In FY 2016/17, the entire allocation was utilised for operational purposes with no provision for capital expenditure, an indication that further reduced funding would not be sustainable,” Thieme explained.
He also stressed that last year an amount of N$ 8.2 Million was not advanced to the NBC, which was to reimburse the NBC for the payment that it made to Huawei (in December 2016) in respect of payments that were due to the latter at the time.
“The undertaking from the MICT was that such payment would be made to the NBC in the 2016/17 financial year, but remains pending to date. The total shortfall for 2016/17 was N$ 23 Million,” he said.
Official figures indicate that as at 24 July 2017, NBC owed N$64.3 million to third parties and creditors.
Thieme said the present situation at the broadcaster has not enabled the board to act with skill, care and diligence as the NBC is no longer able to meet all its liabilities as and when they become due.
“With the current funding level, the NBC is in our view not a going concern and if it was subjected to the Companies Act 2004 (Act No. 28 of 2004) and other common law principles, it would have most probably been up for liquidation,” he shockingly said.
He added: “The limited funding could potentially also expose us as Directors to possible criminal, civil and governance liabilities for failing to ensure that the NBC has the required funds to carry out its operations, a factor that is mainly outside the control of the Directors but determined by the shareholder.”
Thieme said the company managed to grow own revenue from N$84 million to N$102 signalling a 21% growth while further growth of 24% is projected for the current financial year.
“Equally, we can also state that with the further reduction of operational cost from N$369 million to N$345 million for the current FY, we have demonstrated our resolve with Management to have the NBC go in the right direction,” he explained further as he sought to justify the efforts taken by the company to manage the financial situation.
The latter is in our view as Board of Directors a clear indication that we have done our part.
While reiterating that the board has done its utmost to show that our turnaround strategy is beginning to yield results, Thieme told Tweya that matters have now reached proportions where we no longer can sustain the status quo and the board is at a stage where it needs to introduce steps which are aimed at making sure that it[board] is not caught wanting.
He warned that the seriousness of the matter should not be underrated and requires the essential and immediate intervention of your office.
“We again reiterate that any further delays to redress the issue, shall not only expose the NBC to risks of liquidity, credit and operational, but also to extremities of insolvency and liquidation,” warned Thieme.
NBC has also been accused of profligacy in recent years despite being cognizant of the fact that its coffers are empty.
NBC has long been seen as a political tool of the ruling Swapo Party and opposition parties have often complained that NBC is too aligned to the ruling party and as a result sidelines good corporate governance principles to please the political class.
The board members are, Vezenga Kauraisa, Moses Matyayi, Inonge Mainga, Sven Thieme and Wilencia Kanjegerue Uiras.




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