In a bid to improve the running of the State-owned enterprises in Namibia, a Public Enterprise Conference was held at Swakopmund over two days from 12-13 September 2019.
The conference theme was “Unleashing Public Enterprises Potential for Growth”.
Public Enterprise Minister, Leon Jooste during his presentation however, laid bare the burden placed by SOE’s on the State, noting that 81 Public Enterprises have been created over the 29 years since independence.
During 2018 and 2019 they received N$4,024 billion in subsidies and N$1,41 billion subsidies for Commercial Public Enterprises.
Between them, the enterprises have 17 464 employees earning N$8,5 billion in wages – 28% of total PE expenditure.
He went on to note the areas in which the PE’s were lacking, noting their poor performance, ineffective service delivery, that they affect Namibia’s competitiveness, and that they drain the Fiscus of funds that are required for other priorities.
Jooste listed some of the root causes of these issues as flawed governance/ownership models, dual-governance models being allowed for multiple owners, inconsistent execution of ownership functions, complicated reporting lines, diluted accountability and that they operate within inadequate legal frameworks.
Government ministries are not adequately equipped with appropriate skills which results in them having a culture of entitlement and suffer from ‘Big Brother’ syndrome. The minister believes that the situation can be mitigated by redefining the role of the State as policy formulator, owner, regulator and implementer.
He noted that his much-debated hybrid governance model was approved by Cabinet in 2016.
Jooste’s Hybrid Governance Model proposes that extra-budgetary funds (EBF) are non-commercial, non-profit institutions that are both controlled and financed by government to carry out government policies, are funded by government subsidies, taxes, tax levies or other public charges.
Further he believes that the Public Enterprises Governance Act number 1 of 2019 should centralise Commercial PE ownership, that the Ministry of Public Enterprises should have an appropriate structure and skills.
Transformation of the State from a passive, unprofessional shareholder into an active, professional shareholder and the transformation of the Boards and CEO’s is needed.
Jooste spoke to the participants of the conference, saying that PE’s were created to deliver goods or services on behalf of the State.
A PE created today for solid and strategic reasons may be irrelevant in 10 years’ time and the same goes for PE’s that have been in existence since independence.
Jooste asks the hard questions
The minister went on to demonstrate just the types of questions that his ministry and the PE’s should ask themselves, in order to make correct decisions about the viability and future of each one.
What is the reason for the existence of each PE?
What is the nature of the sector in which it operates?
What space does it occupy within the sector?
What space is the private sector occupying in that sector?
What is the profile of the private sector operating in that particular sector?
Is the PE crowding out the private sector?
Is the PE providing a unique service or product that the private sector cannot provide?
The role of the State is to provide the environment for the private sector to grow the economy, create jobs etc.
Is it clever for the State to compete with its own private sector?
PE’s must add value to the public social capital of Namibia, while the existence of PE’s that are not doing this, must be reconsidered in the context of existing economic realities, in order to encourage the principle of a level playing field. How does one fix under-performing Public Enterprises?
Appoint Board members with appropriate skills, qualities and integrity, Jooste noted.
There should be an optimum-skills mix for every PE Board at any given point with a transparent process of identifying and appointing Board members, based on merit. A performance-based culture should be created with feasible Integrated Strategic Business Plans (ISBPs).
Performance Agreements between the minister and the board, and between the board and CEO should be aligned to ISBP KPIs.
PE’s should be right-sized where required; the primary reason for creating PE’s is not to create jobs the minister said. The public enterprises minister would like to see the focus change to just 20 Commercial PE’s and begin to accomplish the following movements as the PE’s begin to perform optimally.
Jooste’s 10 year reform plan
*From N$60b asset to N$125b assets
*From N$700m yield p/a to N$6b yield p/a
*From N$1,1b subsidies p/a to N$ 0 subsidies p/a
*From Employing 11 418 to Employing 24 000
Quinton van Rooyen’s advice to the CEO’s of Namibia’s SOE’s at the conference: “The Trustco performance management formula is tried and tested and the company’s achievements are proof that it can be successfully replicated to the national benefit by most, if not all of the current beleaguered state-owned enterprises.”