'Save public enterprises'
The sector is in a dire situation and requires a quick fix.
Minister of Public Enterprises, Leon Jooste, made an urgent appeal on the National Assembly to pass the much-anticipated and long overdue Public Enterprises Governance Bill, as a measure to save the parastatal sector.
The Bill was tabled at the National Assembly last week and comes nearly three years after the ministry was established, which was justified as a mechanism to implement a centralised ownership model for public enterprises.
Jooste said the proposed Bill will strengthen the government's oversight functions and thereby strengthen the ability of the state to become a professional shareholder.
He said the ministry has since spent countless hours analysing and diagnosing the core reasons for the “obvious failure” of most State-owned Enterprises (SOEs) and said overwhelming reasons for this failure is because of the “highly flawed” dual governance model, which is currently in place.
“This is not a Namibian failure as such but rather a common global scenario, which is why many countries that have already migrated towards a more centralised governance and ownership model are in the process of doing so,” Jooste said.
The context for the urgency for the Bill to be passed lies in the available figures.
The portfolio of public enterprises has a total asset value of N$93 billion since the end of June. It employs 17 224 people. The total liabilities of this sector, however, amount to a whopping N$44 billion, which leaves it with a net asset value of just N$49 billion. The commercial public enterprises have a N$62 billion asset value, N$30 billion liabilities, an annual income of N$23 billion and an expenditure of N$21 billion and a profitability of just N$1.9 billion. This gives a return on assets of only around 1.2%. Jooste said the promulgation of the Bill is of utmost importance to unlock and facilitate the revival of Namibia's economy at a time when it is sorely needed.
PROVISIONS OF THE BILL
“We shall introduce multiple measures to eradicate mismanagement, corruption and overall poor performance to effectively enhance shareholder value and to ensure the efficient and effective supply and delivery of services and products on behalf of the state,” Jooste said.
He said there is no evidence that a dual governance model has ever worked effectively in any country.
The ministry has developed a hybrid governance model. Under this, public enterprises will be classified as commercial, non-commercial or extra-budgetary fund.
The ministry will make recommendations to Cabinet on the declaration and classification of these entities, and upon consideration of the classification, the entities will be expected to generate sustainable profits and pay dividends to the State.
An extra-budgetary fund is a fund whose only source of revenue comes from the government through budgetary allocations or tax-related levies.
The minister can make any provision of the Bill applicable to any public institution and its governance structures. The minister will also represent the government as the shareholder of the commercial public enterprises, and can appoint or remove board members.
The minister can dictate what information the entities must provide to the ministry, spell out the duties of the board, what records to be kept, under what circumstances and penalties can be meted out against erring entities, what methods should be employed in investigations, and dictate performance measurements.
CATHERINE SASMAN
The Bill was tabled at the National Assembly last week and comes nearly three years after the ministry was established, which was justified as a mechanism to implement a centralised ownership model for public enterprises.
Jooste said the proposed Bill will strengthen the government's oversight functions and thereby strengthen the ability of the state to become a professional shareholder.
He said the ministry has since spent countless hours analysing and diagnosing the core reasons for the “obvious failure” of most State-owned Enterprises (SOEs) and said overwhelming reasons for this failure is because of the “highly flawed” dual governance model, which is currently in place.
“This is not a Namibian failure as such but rather a common global scenario, which is why many countries that have already migrated towards a more centralised governance and ownership model are in the process of doing so,” Jooste said.
The context for the urgency for the Bill to be passed lies in the available figures.
The portfolio of public enterprises has a total asset value of N$93 billion since the end of June. It employs 17 224 people. The total liabilities of this sector, however, amount to a whopping N$44 billion, which leaves it with a net asset value of just N$49 billion. The commercial public enterprises have a N$62 billion asset value, N$30 billion liabilities, an annual income of N$23 billion and an expenditure of N$21 billion and a profitability of just N$1.9 billion. This gives a return on assets of only around 1.2%. Jooste said the promulgation of the Bill is of utmost importance to unlock and facilitate the revival of Namibia's economy at a time when it is sorely needed.
PROVISIONS OF THE BILL
“We shall introduce multiple measures to eradicate mismanagement, corruption and overall poor performance to effectively enhance shareholder value and to ensure the efficient and effective supply and delivery of services and products on behalf of the state,” Jooste said.
He said there is no evidence that a dual governance model has ever worked effectively in any country.
The ministry has developed a hybrid governance model. Under this, public enterprises will be classified as commercial, non-commercial or extra-budgetary fund.
The ministry will make recommendations to Cabinet on the declaration and classification of these entities, and upon consideration of the classification, the entities will be expected to generate sustainable profits and pay dividends to the State.
An extra-budgetary fund is a fund whose only source of revenue comes from the government through budgetary allocations or tax-related levies.
The minister can make any provision of the Bill applicable to any public institution and its governance structures. The minister will also represent the government as the shareholder of the commercial public enterprises, and can appoint or remove board members.
The minister can dictate what information the entities must provide to the ministry, spell out the duties of the board, what records to be kept, under what circumstances and penalties can be meted out against erring entities, what methods should be employed in investigations, and dictate performance measurements.
CATHERINE SASMAN
Comments
Namibian Sun
No comments have been left on this article