Hybrid resuscitation is no salvation for moribund parastatals

by Dr Charles Mubita

Hybrid resuscitation is no salvation for moribund parastatals

The culture of celebrating mediocrity has taken root in our societies to the extent that even planning to fail is applauded with pomposity. Namibia woke up last week to the announcement of the hybrid governance model for public enterprises.

This followed, we are told, months of research, benchmarking and consultation. The model is lauded as revolutionary. The conclusion of this supposedly watertight and lofty exercise has classified parastatals (note that the new and popular term is “public enterprises”) into three categories namely: commercial/economic enterprises; non-commercial enterprises; and financial institutions and extra-budgetary funds.

Indeed, governance plays an important role in determining how parastatals function. Governance can simply be defined as the processes, structures and organisational traditions that determine how power is exercised, how stakeholders have their say, how decisions are taken and how decision-makers are held to account.



Therefore the question to be answered is what impact the hybrid system will have on accountability in these parastatals bearing in mind that each parastatal has a unique bureaucratic structure and legal mandate that makes its authority specific yet opaque and its management structure clear and detached from line ministries.

Alongside the hybrid governance in vogue today, the public-private partnerships, parastatals give rise to a schizophrenia about the relationship between public and private, and between government and SOEs.

There is ample anecdotal evidence that there is no single coherent, flawless model for parastatals. Few non-profit parastatals worldwide use the traditional model where the board governs and oversees operations through committees established around functions (finance, human resources, programmes, etc) and delegates the management of those functions to the executive manager. In addition to the traditional model, there are other models such as the operational model, the collective model, the management model, the constituent representative model, the results-based model, the policy governance (Carver) model, the advisory board model, and the hybrid model which is basically a mixture of practices to suit varied parastatals. These models often fail because they are not easily adaptable to the unique circumstances of certain parastatals.

At face value, our hybrid “game changer” looks appealing. In reality the whole exercise does not provide compelling evidence to demonstrate why a ministry, with very limited expertise in the specialized fields of these entities, should lead them. Even if they were departments or directorates, it defies logic how one ministry can oversee parastatals with varied areas of specialisation when history has demonstrated over the years that single ministries, with fully-fledged and specialised departments dismally failed to oversee the performance of one or two parastatals within their jurisdiction. The change from dual to hybrid governance is not a panacea to the clutter prevailing in our SOEs.

The key to reforms is not the content. What matters most in improving the record of implementation are the strategic and tactical decisions taken during the course of reforming. The content of reform makes very little difference to the success rate. In fact different kinds of reforms from centralisation, decentralization to hybrid, capacity building, and what not, have shown time and again that they are prone to failure.

They do not fail because of unsatisfactory outcomes. They fail because they never get to pass the planning stage. They fail because the purpose of the reform is not clear. This blurs the vision for the attainment of the intended goals and makes implementation of the plans unsustainable. The outcome is tokenism. The new model stops at the content of the reform (what sort of initiative should be taken), and partially attempts to explain the approach (how the reform will be undertaken). This demonstrates naivety of failing to answer hard questions such as why do parastatals perform poorly while continuing to drain public funds. The purpose for their establishment has never been clearly defined.

It would be foolhardy to believe that grouping 18 parastatals with different specialised fields and focus into one ministry, not as departments or directorates but as autonomous enterprises, will result in sustainable delivery of socio-economic services with checks and balances. What is required is to do a comprehensive audit of all SOEs including but not limited to auditing of business model efficacy, performance, human capital, corporate culture alignment, innovation funnels, corporate governance systems and structures, strategic alignment, internal control systems, finance and investment, corporate reporting, customer service and marketing systems, return on investment and product-customer fit. This will inform us of the deficit of the marriage between SOEs and government and, by extension, dictate the strategies going forward.

Merit in the appointment of CEOs and board members should be enforced otherwise we will be bogged down with perennial losses, shoddy products, non-delivery of services, worst breed corporate governance and loud-sounding turnaround strategies.

 

  • Dr Charles Mubita holds a PhD in International Relations from the University of Southern California.

 

 

 

 

 

 

 

 

 

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