SOE reforms could save the country

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There is currently a great deal of – for lack of a better word – pandemonium in the government and public enterprises fraternity regarding the mooted reform of public enterprises.

There are currently boardroom fights, even in the high echelons of government, about various propositions made so far to reform the sector.

Public Enterprises Minister Leon Jooste continues to assure the nation that any reforms – which could include joint ventures through public-private partnerships (PPPs) – would be done according to relevant laws and in the best interest of the country.

By best interest of the country, we hope Jooste implies not only good corporate governance, but also financial performance that would reduce the reliance of these institutions on the State.

Poor financial performance has become the hallmark of probably the majority of SOEs in this country, to the point that so much money, indeed billions of dollars, is being pumped in to keep these institutions afloat.

Sadly, the lion’s share of such bailouts end up in the pockets of employees of such institutions, and not on the mandates and growth of the entity.

It is astounding, for example, that there is no standard policy – or enforcement – on how much any public entity may spend on remuneration of employees in relation to their revenue, whether self-generated or received as a subsidy.

Shockingly, there are institutions, some of them government ministries, that spend up to 75 percent or more of their budget on remunerative packages alone. It is shocking, if not unethical.

It is in areas like these that we hope the envisaged reforms would make a difference. Profitability is another area. State capitalism is huge in Namibia, with most public enterprises enjoying unfettered monopoly in their respective industries.

It, therefore, defies logic that even with that brick wall of state protection surrounding them, many of these public enterprises continue to rely on annual government bailouts for their existence.

If government did not have to pay billions of dollars in subsidies to parastatals, that money could be reserved for critical development activities, such as infrastructure and to feed the masses of increasingly desperate and destitute people, whose only meal of the day is to be found at the dumpsites.

Jooste’s propositions for change must, therefore, enjoy the nation’s utmost attention and input, so that together we chart the way towards sustainability and profitability.

Government’s mandate is so broad and demanding that it created public enterprises to help deliver some of the services on government’s behalf. Unfortunately, by creating such entities – the majority of whom have a commercial mandate – government has inadvertently brought a burden on itself.

Hence, many of these institutions that are dependent on yearly bailouts remain stunted in their growth, like a baby lacking essential vitamins.

Privatisation is perhaps a rather sensitive topic under the circumstances, but restructuring of operations and downsizing to a leaner workforce focused on the task at hand is certainly one possible intervention.

Closing down some of the entities, especially those whose key mandate overlap with their sister organisations, is not as fearful an exercise as it is made out to be.

There are entities in the public space that cannot even afford to pay salaries at the end of the month and when they are bailed out, the bulk of the subsidy ends up in the pockets of the top executives.

This means such bailouts seem not to help complete essential projects that would benefit the entire nation, but to feed the families of officials who are failing those very institutions.

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