Jooste offers wisdom to SOEs
How do you professionalise public enterprises without crippling their operations? By getting state-owned entities formulate realistic and sustainable business plans.
This is what the Minister of Public Enterprises is hoping for and he believes realistic business plans could be a way for SOEs to avoid the perennial bailouts they require because it will enable them to operate within their means, while coming up with tangible economic plans that can grow both the operations and asset base of the company.
He was speaking at the Economic Association of Namibia’s (EAN) business breakfast on the state of State-Owned Enterprises (SOEs) in Windhoek this week.
Jooste emphasized the need for the state to become a professional shareholder.
“In this year of reckoning we are anticipating that legislation will be passed to empower us to carry out necessary reforms for SOEs,” he stated.
Considering the economic status of the country, Jooste says SOEs have the potential to wean themselves off government bailouts by submitting business plans that are economically feasible. “A well-known example is Air Namibia, although it is not an isolated case.
Looking at previous business plans submitted by the national airline, they (business plans) should not have been approved in the first place because they were not feasible, and nor did they meet shareholder expectations.
The airline can break even within three years without government bailouts, he said.
“If the state was a professional shareholder back then, we could have saved the country billions of dollars.
This shows that there is no performance culture, however the fact that some SOEs can perform and others struggle shows that there is potential for all of them to perform. Hence the point is that approval of business plans need to be feasible and align with the expectations of shareholders,” said a regretful Jooste.
According to Jooste, SOEs are facing numerous challenges and it is essential to have legislative power to implement reform and re-evaluating the role of the state as a shareholder.
He further shared that his Ministry is working on a ‘shareholder toolbox’ to combat shareholder failure which he alleges results in ‘SOE Culture’ which is basically the bailout culture visible in the country.
This will better prepare government priorities when it comes to creating and funding SOEs, he said.
Components of the toolbox include prioritising subsidies, engaging banks on government guarantees, engaging the private sector on turnover strategies for SOEs and ensuring good corporate governance with emphasise on human capital.
“Governance is about people, so it is no use having brilliant policies, guidelines and regulations if we do not have quality people, starting with SOE boards. We need to appoint high skilled and sector specific board members with integrity.” On allegations of people serving on multiple SOE boards, “please know that is illegal for anyone to serve on more than two SOE boards” he added.
Jooste is pushing for the Amendment to his ministry’s Act which will give him the required legal mandate to address challenges plaguing parastatals in the country.
Since its establishment in 2015, the Ministry continues to operate without any legal powers. The cause for the delay remains unclear.
The Hybrid Governance Model, which is a prerequisite to effect the reforms as it forms the governance infrastructure upon which reform can be built, has already been approved by Cabinet in 2016.
Many SOEs have failed to live up to their founding mandates, some like the national airliner have not submitted its audited annual financial results for over a decade now while others have been ignoring set remuneration guidelines by paying employees over the top salaries.