Political Perspective

Gwen Lister

It’s just plain sad. I suppose we should be grateful for small mercies and appreciate the fact that our political elite turned down the proposal of Finance Minister Saara Kuugongelwa-Amadhila to hike the top salary of the Road Fund Administration (RFA) because the preferred candidate earned more than what the current package offers. At least some sense still prevails, but in a very limited sense, unfortunately.



WHAT is also clear, as emphasised in a recent report by Deloitte & Touche, is that policy must be revised regarding the fact that most parastatal heads, when suspended or dismissed, either continue to be paid or are offered exit packages by the state-owned-enterprise in question, despite the fact that they have ‘messed up’. Deloitte & Touche certainly aren’t the first to have pointed this out. It’s been highlighted with monotonous regularity in the past by myself, among others, that this is a travesty. Worse still, but not mentioned in the report by the professional services company, is the fact that many of these CEOs are given packages even when they decide to resign and leave voluntarily.

And as it is proved that a CEO has mismanaged one of these public companies, they are never held liable in any way. One would think the huge salaries are paid primarily because of the fact that they take on a huge responsibility and duty to oversee the good operation of said companies.

Considering the fact that (according to the Deloitte report) there are currently 72 SOEs, a huge number by any standard, it is not difficult to see what the wrongly-appointed and derelict CEOs can cost the country in terms of these packages. The proliferation of parastatals to 72 (rising from 42 in 2009) is also great cause for concern and a form of thinly-disguised corruption in itself.

Deloitte said that “SOEs should only be established for key infrastructure and service industries such as water, energy and development financing. They should only exist where particular basic services required cannot be provided by the private sector ... where these services are of critical importance to the well-being of citizens”. In terms of this definition, many of the current SOEs in existence really shouldn’t be there at all, and in fact end up prejudicing the consumer or end-user because they simply add to the costs of the service being provided. The REDs are a very good example in this regard.

Apart from the fact that directors of a company should be held liable for loss, damages or costs sustained by a company as a consequence of a breach of duties, directors should fear responsibility for their actions. But this hardly happens in Namibia. Here the company itself must usually bear the cost of above-mentioned mismanagement or poor decision-making, and if all else fails, the burden to the taxpayer is increased even more by state bailouts.

This is an absolutely unacceptable state of affairs, and Cabinet, instead of discussing upgrades of the packages, should be ensuring that these CEOs pay the price of poor performance or worse, and that the directors accept their share of the responsibility as well. More often than not, many of these directors are paid more for individual sittings of the board than most Namibians earn! And half of them, to be sure, don’t even know what they’re doing.

All in all, what the mushrooming of SOEs and resultant proliferation of highly-paid CEOs and lucrative board positions largely bring about, are higher costs for the consumer, and more top jobs for friends of the elite.

There is no point in creating more parastatals that are not profitable, because this, after all, is the reason for their existence, and most of ours do not perform in this regard. Quite the contrary. They suck us dry. The SME Bank, a semi-parastatal, is a case in point. After three months in operation it has already gone through N$60-million with nothing to show for it in terms of its intended purpose of assisting small and medium business start-ups. What then, one might ask, is its CEO being paid for? It is disgraceful, and instead of going back to the drawing board on a concept that clearly isn’t working; government will probably end up recapitalising it with hundreds of millions of dollars if not billions.

Rather than Cabinet talking about CEO salaries, they should be reducing this wasteful phenomenon called SOEs to the barest minimum, and making sure they work in the interests of the country and its people.

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