Does Parastatal Reform Work for Namibia?

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By Wezi Tjaronda WINDHOEK As government strives to reform the state owned enterprises (SOEs), some believe that the move is deemed to fail unless parastatals themselves are involved. Recent statements concerning the operations of SOEs, which many say have failed to live up to expectations, indicate that if anything, there has been little consultation between the promoters of the bill and the existing SOEs. While accusing fingers point to the government for wanting to exercise control over the affairs of SOEs, it has also been noted that the laissez faire attitude of the government over SOEs is one of the root causes of problems among parastatals. Parastatals have a history of problems even at global level. They are known to fail to perform efficiently and effectively the function for which they were created, as they provide shoddy and unreliable services. They are also known to be plagued by corruption, incompetence and draining resources from public coffers. These problems emanate from among others the governments’ politically motivated ownership of SOEs and also a totally passive ownership by the state, according to Hubert Schillinger, Resident Representative of the Ebert Friedrich Stiftung (FES) in his presentation on the International Perspective of parastatal reform at a breakfast meeting Wednesday. The meeting was organised by the Namibia Economic Society. The SOE Bill was tabled and passed by the National Assembly late last year to put in place mechanisms that bring about accountability. A Member of Parliament, Johan de Waal is of the opinion that lack of consultation between the parastatals and promoters of the bill is “a sure formula for failure”. “I do not believe that any parastatal reform will be successfully achieved if it starts off with confrontation,” he told a breakfast meeting called to deliberate on whether or not parastatal reform can be successful for Namibia. De Waal said it was unlikely that the current parastatal reform would be successful because the process that the lawmakers have embarked on would be cumbersome and inefficient with very little to show in the end. Recently, representatives of SOEs among others voiced concern about government’s move, which they say will among others scare away investors due to the excessive control the government wants to exert. The SOE representatives feel that while the move would not improve efficiency, it would not counter mismanagement and irresponsible investment of public money. Parastatals were created to render services to the people of Namibia efficiently and effectively on behalf of the government and also to make good business and give good returns to the government, said Jonny Hakaye, Chairman of the National Select Committee on the State Owned Enterprises Bill. He said while the government was doing its best to maintain and sustain the parastatals, throughout the years the performance, management, and investments and service delivery of many SOEs has left a lot to be desired. The bill, added Hakaye, came in order to address the imbalances in the running of the enterprises after the public made several warnings about the situation and manner in which their money was being squandered and invested. Hakaye said unlike sentiments from the SOEs themselves, the bill was not interfering or encroaching upon the affairs of the SOEs; nor would it scare off investors. “Serious investors do not only need security but need good returns and smart partnership above all,” the NC member said. The government has gone to an extent of saying it will start allocating targeted subsidies to SOEs because many have become liabilities as they divert much needed financial resources. Some of the reasons, de Waal said, that have resulted in poor performance of SOEs are: lack of spelt out expectations from SOEs; lack of checks to see the performance of the enterprises; confusion that has been created by the system in which two ministers are responsible for the companies and also government’s failure to make a distinction between parastatals such as monopolies and those that compete with the private sector. Schillinger said the inefficiencies of SOEs were also caused by the use of parastatals that are not directly related to economic and social development. He noted that globally, SOEs were used to locate surplus labour and its senior positions were held by political patronage positions and that the world has also not seen an infusion of a strong development mission by the governments. Globally as well as in Namibia, SOEs have no hard budget constraints as treasury always bails them out and they survive as loss makers. Schillinger also noted that political interventions and strenuous government controls inhibit them from fulfilling their missions, and that SOEs are protected from major threats like takeovers or bankruptcy due to protected or monopoly status.