Public enterprises in the spotlight
Government guidelines on reforming governance at state-owned enterprises are often contradictory or unclear, the Institute for Public Policy Research says.
The government plans to restore public trust in state-owned enterprises (SOE) marred by corruption and mismanagement.
“Since the introduction of the hybrid governance system, not much has happened in the governance space for public enterprises. In fact, the Act which was supposed to enable the new system has not been tabled in parliament, more than half a year after it was supposed to,” says the Institute for Public Policy Research (IPPR).
The institute last week released its second analysis of a number of issues plaguing the government's plan to reform public enterprise governance through a hybrid governance system.
However, a delay in the process has already been noted.
The report states that determining which enterprises are covered under these new governance guidelines should be the first step. “Unfortunately government guidelines on the topic are often contradictory or unclear,” it finds.
“The board appointment process proposed under the new system needs a far greater degree of transparency.
Boards are crucial to good governance and political influence has to be removed,” the IPPR says.
The report calls for a more transparent oversight system, and warns that compliance could prove the undoing of the reform plan.
In 2015, the minister of public enterprises, Leon Jooste, complained in parliament that public enterprises were not complying with his requests for information and he criticised the lack of compliance with laws stipulating the publication of annual reports.
Max Weylandt, the IPPR researcher who wrote the report, says although annual reports are a legal requirement for SOEs, many did not produce them for over a decade, and there were no consequences.
“This entire system will fail if there is not regular and full compliance with rules, and based on past performances we are not sure that will happen,” he warns.
“Concrete changes, rather than excellently drafted policies, will be the proof that real reform is happening.
Finally passing the new Act and getting public enterprises to comply with financial reporting rules would be indicators of progress,” the IPPR analysis states.
Team efforts
The institute makes three recommendations, which it says have not changed since its last report on public enterprises published in November last year.
These recommendations include clarifying which public enterprises the government owns.
The government should publish a list describing all companies in which it has a significant stake, their mandate, who they report to and what governance standards they should follow, it suggests.
There is a lot of confusion about the government's holdings, and the lists published by the public enterprises ministry are inconsistent, it says.
Some companies are not listed at all, raising the question of who they should report to and which governance guidelines they adhere to.
“Clarity around ownership is of utmost importance when it comes to public enterprises.
Because public enterprises are ultimately owned by citizens, and because they are often designed to provide important services to the public, they should operate under especially stringent rules of accountability – they should be more public than public companies,” the report says.
Shine a light
The second recommendation is to make board appointments more transparent.
The report states that the appointment process proposed by the public enterprises ministry is an improvement on the existing one, but still does not allow for enough transparency.
“In the past many Namibian public enterprises have been characterised by board mismanagement and even corruption.
This has been attributed at least in part to political interference with boards, as well as the appointment of board members based on political considerations rather than on the basis of qualifications,” the IPPR says.
Under the new system, the ministry is introducing its principles, policy frameworks and directives document, which states that the selection of board members must be transparent in order to assure trust and confidence.
The IPPR points out that unless the appointment system is revised, it is not sufficiently transparent to allay fears of misconduct and other acts.
The current system is almost exclusively internal, “with only one person outside government consulted,” it says.
JANA-MARI SMITH
“Since the introduction of the hybrid governance system, not much has happened in the governance space for public enterprises. In fact, the Act which was supposed to enable the new system has not been tabled in parliament, more than half a year after it was supposed to,” says the Institute for Public Policy Research (IPPR).
The institute last week released its second analysis of a number of issues plaguing the government's plan to reform public enterprise governance through a hybrid governance system.
However, a delay in the process has already been noted.
The report states that determining which enterprises are covered under these new governance guidelines should be the first step. “Unfortunately government guidelines on the topic are often contradictory or unclear,” it finds.
“The board appointment process proposed under the new system needs a far greater degree of transparency.
Boards are crucial to good governance and political influence has to be removed,” the IPPR says.
The report calls for a more transparent oversight system, and warns that compliance could prove the undoing of the reform plan.
In 2015, the minister of public enterprises, Leon Jooste, complained in parliament that public enterprises were not complying with his requests for information and he criticised the lack of compliance with laws stipulating the publication of annual reports.
Max Weylandt, the IPPR researcher who wrote the report, says although annual reports are a legal requirement for SOEs, many did not produce them for over a decade, and there were no consequences.
“This entire system will fail if there is not regular and full compliance with rules, and based on past performances we are not sure that will happen,” he warns.
“Concrete changes, rather than excellently drafted policies, will be the proof that real reform is happening.
Finally passing the new Act and getting public enterprises to comply with financial reporting rules would be indicators of progress,” the IPPR analysis states.
Team efforts
The institute makes three recommendations, which it says have not changed since its last report on public enterprises published in November last year.
These recommendations include clarifying which public enterprises the government owns.
The government should publish a list describing all companies in which it has a significant stake, their mandate, who they report to and what governance standards they should follow, it suggests.
There is a lot of confusion about the government's holdings, and the lists published by the public enterprises ministry are inconsistent, it says.
Some companies are not listed at all, raising the question of who they should report to and which governance guidelines they adhere to.
“Clarity around ownership is of utmost importance when it comes to public enterprises.
Because public enterprises are ultimately owned by citizens, and because they are often designed to provide important services to the public, they should operate under especially stringent rules of accountability – they should be more public than public companies,” the report says.
Shine a light
The second recommendation is to make board appointments more transparent.
The report states that the appointment process proposed by the public enterprises ministry is an improvement on the existing one, but still does not allow for enough transparency.
“In the past many Namibian public enterprises have been characterised by board mismanagement and even corruption.
This has been attributed at least in part to political interference with boards, as well as the appointment of board members based on political considerations rather than on the basis of qualifications,” the IPPR says.
Under the new system, the ministry is introducing its principles, policy frameworks and directives document, which states that the selection of board members must be transparent in order to assure trust and confidence.
The IPPR points out that unless the appointment system is revised, it is not sufficiently transparent to allay fears of misconduct and other acts.
The current system is almost exclusively internal, “with only one person outside government consulted,” it says.
JANA-MARI SMITH
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