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Tuesday 18 June 2019
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SOEs report billion dollar loss in 2017/18

… as private sector experts exit the ministry

 

By Kelvin Chiringa

State Owned Enterprises have made a combined loss of N$1.6 billion in the previous financial year alone, Minister Leon Jooste has  disclosed.
The minister said in the best cases for SOEs, returns continue to be significantly lower when compared to the private sector adding that they can and should be vastly improved.
Jooste could not provide a comprehensive figure of the total loses made over the past four years.
“This is a bit complicated to answer since some have declined while others improved and it depends on whether once focusses on the Commercial PEs or all the PEs etc,” he said.
In this financial year, state owned entities are projected to get N$40 million budget allocation.
This is a decline from N$48 million in 2018/19 and N$47.5 million in 2017/18.
In the 2017/18 financial year they enjoyed guarantees totaling N$9 billion, sitting on an asset value of N$91 billion and N$43 billion liabilities.
Their debt in the same year was estimated to be 25% of the total economy or some N$43 billion.
In the meantime, revelations of the staggering loss also come at a time when a team of private sector consultants, that was roped in to provide expert skills and knowledge within the public enterprises ministry, is leaving due to their contracts expiring.
This has posed questions as to what will become of the public entities, most of which are poorly run and surviving on huge government bail outs to the detriment of the economy.
A ministerial executive director, Annascy Mwanyangapo who spoke to The Patriot disclosed that while some of the public entities ministry’s consultants are still around, all of their contracts will expire during the course of this year. Jooste could not provide a figure on how much his ministry had spent on these consultants while Mwanyangapo said such information was not for public consumption.
“From our international benchmarking, it is uniformly obvious that the benefits of a professional shareholder, staffed with the right high level skills and business experience, far outweigh the costs of such expertise,” he said in an emailed response to questions sent to him.  He said the alternative of making use of the services of consultants will be far more expensive and time consuming.
“And (this) will result in fragmented consultancy reports that one will still be unable to implement due to the lack of appropriate skills to monitor and evaluate the various reform initiatives,” said the minister.

 What next?
The minister said that they are currently continuing to persuade the relevant decision-makers that it is essential to continue on the route they commenced, despite the contracts of the current experts coming to an end.
Jooste remarked that the current dual-governance model of managing the commercial public entities by line ministries has proven to be ineffective and has prevented the ministry from having a meaningful impact.
He also emphasized that only a dedicated professionally staffed ministry will change this scenario.
According to Jooste, the reform of the Namibian public enterprises requires three equally non-negotiable elements which are:

a)an appropriate governance model (this was done when the Hybrid Governance Model was approved in 2016),
b)appropriate legislation to implement the model (this process was prolonged but concluded when the Public Enterprises Governance Act was finally passed in April 2019)

c) and the appropriate skills to allow for the ministry to function as a professional active shareholder and to propose and implement the complex reforms.
“We shall fail if any one of these is not included,” said Jooste.

A job well-done
With contracts for the experts expiring this year, the impact they have left within the ministry has been put to question.
Without pointing at what exactly they had accomplished, the ministerial executive director, Mwanyangapo remarked that the consultant had done their job up to required standards.

“They had come in with contracts; I believe you would also have picked up since you have spoken to some of them or those who are here, that their contracts expected deliverables.”

“Yes they were here for a given period of time. They have done their work, they have concluded their term. If there is anything that needs to be worked on as time goes on obviously that falls on the ministry because these people did not come to stay for the rest of their lives. The ministry will have to carry forward the programs,” she said.

In July 2016 the Hybrid Governance model was approved to commence that transformation journey, and the team of experts was brought in for that purpose, Jooste said. He said the team has laid the foundation for the implementation of the Hybrid Governance Model and the professionalisation of the shareholder’s function in relation to commercial public enterprises
“The team was instrumental in compiling and analyzing the PE sector financial status as well as driving the finalization of the revised legislation.
The process of finalizing the new legislation was not under the control of the Ministry of Public Enterprises and it is unfortunate that it took so long to pass the Public Enterprise Governance Act, as this has delayed most of the changes that could already have been implemented, especially in the case of the ailing Commercial PE’s,” said the minister.




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