Monday 19 April 2021
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Public enterprises legislation in full force

By Staff Reporter


Public Enterprise Minister Leon Jooste is excited that the implementation of the Public Enterprise Governance Act (PEGA) is finally a reality.


The National Assembly passed the bill in April last year and had been referred to President Hage Geingob for signing into Law.


Asked to comment on the passing of the legislation at that time, Jooste told this publication, “I have mixed feelings. I am happy that it’s finally passed but disappointed that it took so long. We are however, looking forward to its implementation and the associated opportunity to embark on the real reforms of our public enterprises,” he said.


And now finally, at the dawn of its implementation Jooste, says “it is important to stress that the Minister can only identify a public enterprise to be considered for restructuring ‘in consultation with Cabinet’. I want this to be noted to allay any fears that the Minister will have the power to unilaterally embark on a restructuring without it requiring Cabinet approval.    When any restructuring is contemplated, we are bound by the Act to take into account the purpose for which the public enterprise was created, a risk assessment and impact report, the performance of the public enterprise, the reasons for restructuring and any representations made by any relevant stakeholder.”


PEGA provides the Ministry of Public Enterprises with the optimum institutional and organisational infrastructure to reform our public enterprises without escalating costs.

The model allows for the ministry to become more focused and specialised with an appropriate structure and skills to be a professional, active shareholder representatives for the state.


Asked to elaborate, Jooste says, “it should be clear that the legal implementation of the Hybrid Governance Model is effectively in place and active. Formal handover meetings will be arranged with each affected Ministry and these will be concluded as soon as practical,” says Jooste.


A hybrid institution is as an institution which exists between or across the boundaries of sectors, government departments, geographic units, or combines the governance regimes of the State and the private sector.


“The Ministry of Public Enterprises remain committed to elevated transparency and seamless cooperation with the various Line Ministries during the transition and post-transition period,” Jooste says. “The fact that this model and legislation has (sic) now clearly redefined the role of the State as policy formulator, owner, regulator and implementer will facilitate more uncomplicated inter-ministerial interaction and cooperation which is of vital importance.”


Calling for collaboration, Jooste says “ The successful implementation of the new Hybrid Governance Model and the reform of our Public Enterprises will only be possible if we approach this collectively. The successful reform of our Namibian public enterprises is a non-negotiable element that has become critical to ensure that the current economic downturn is countered as soon as possible.


I believe that economic recovery will be all but impossible without calculated but expedited public enterprise reforms to increase profitability, contain and minimise subsidies and to entirely cease bailouts as soon as practical,” Jooste says optimistically.


The reform of Public Enterprises will consist of two parallel elements:


Improving the performance and feasibility of existing Public Enterprises and restructuring Public Enterprises. This may include any of the options as mentioned in the Act as well as several others such as the merging of public enterprises and the re-absorption of public enterprises into Line Ministries.


The provisions of this Act prevail if a conflict relating to any matter provided for in this Act arises between this Act and the provisions of the establishing law or document of a public enterprise.


Jooste says, “the logic behind this model is that although the centralisation of ownership is the most appropriate governance model, it would be a mistake to centralise the ownership functions of all the above categories of Public Enterprises. One of the most fundamental anomalies we had to address in the design of the new governance architecture was to address the scenario where potential conflict of interests existed in cases where some authorities (ministries) had complete control over all policy formulation, regulatory functions and implementation within a certain sector.


This created fertile ground for possible unintended uncompetitive behaviour and might have influenced the slow liberalisation of certain sectors of our economy. In the Hybrid Governance Model only the ownership of the Commercial Public Enterprises are centralised while the other two categories, Non-Commercial Public Enterprises and Financial Institutions and Extra-Budgetary Funds, remain in a dual governance model where the Ministry of Public Enterprises will set corporate governance guidelines that they must adhere to while the typical functions associated with ownership will remain with the various Line Ministries.”


The minister believes that the bill represents a revolutionary, yet necessary reform of the public enterprises sector, and the implementation thereof will guide the country towards further enhanced efficiencies and performance outcomes.

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