‘Government needs to get a grip on SOEs’

A PROPOSED law to govern and monitor State-Owned Enterprises would move the economy from its current sluggish state to a higher growth path.

This is the view of First National Bank economist Martin Mwinga, who says the lack of control Government, as shareholder, has had over SOEs in the past has led to their dismal performance. Mwinga told a National Council select committee on Friday that the controversial bill, which was up for public discussion last week, should not be seen in the narrow context of fighting corruption and dealing with inefficiencies only.”The reason why SOEs have not been successful is because Government has not taken an active role in managing and monitoring SOEs,” said Mwinga.The bill, he said, was not all bad, and he viewed it as Government taking control over managing the economy better.He disagreed with CEOs of parastatals who told the hearing that the law would affect the autonomy of the institutions and the duties of CEOs and boards of directors.As the main and in many cases the sole shareholder, Government was entitled to know more about and direct the business activities of SOEs, said Mwinga.He told the committee that it had to consider that Government needed to use the more than 50 public enterprises at its disposal to boost economic growth and reverse high unemployment and poverty.SOEs had to satisfy a complex and often conflicting range of political, economic and social objectives.The bill had to be seen in this light, he said.However, Mwinga did criticise some provisions of the bill in its current form.He recommended that the Governance Council be accountable to Parliament rather than to Cabinet, saying parliamentarians were the custodians of public assets and a better system of checks and balances had to be put in place when it came to overseeing parastatal performance.”Parliamentary oversight is critical and crucial in ensuring the efficiency and effectiveness of SOEs,” said Mwinga.Parliament is excluded totally from the bill in its current form, and has no role to play in monitoring the performance of SOEs.Mwinga said Parliament should be keeping Ministers responsible for SOEs in check.In his view, a council compromised only of Cabinet Ministers could result in too much political interference.Rather than the Prime Minister heading the Governance Council, the council should report to the premier, advised Mwinga.”You can’t be a player and the referee,” he remarked on the role the bill currently proposes for the Prime Minister.Mwinga also recommended that the Minister of Trade be excluded from the council, and that besides the Minister of Finance, the Attorney General and the Director General of the National Planning Commission, three or more competent professionals such as accountants, private-sector individuals and academics should be appointed to the Governance council.The National Union of Namibian Workers also told the council on Friday that the Governance Council had to appoint a wider range of people more representative of the social sector.Mwinga said as a shareholder, Government was well within its rights to demand that SOEs furnish it with business plans, budgets and investment intentions.”They are the shareholder.How else must they know what’s going on.I have worked in the public and private sector.I know of business plans that are drawn up and put in the cupboard and never get looked at again,” said Mwinga.He felt that remarks by parastatal representatives, who maintained the council would not be able to handle the workload along with their daily duties, were unjustified at present and could only be determined once they got down to business.Although agreeing with other company representatives who argued that the nature of the investment market dictated that they act promptly and they could not be expected to obtain Ministerial approval first, Mwinga said other measures could be put in place which would keep the Governance Council abreast of budgetary and investment developments.He also proposed that an investment policy be approved by the Finance Minister, spelling out the types of investments that could be made with public funds.Mwinga said it was important that Government kept a closer eye on SOE budgets and business plans than it had been doing, because it was evident that some enterprises did not know what to do with surplus funds.He said while Government often had to scrounge around to borrow money for development projects, the cash surplus some SOEs were hanging on to could be used for this purpose.SOEs also prepared budgets and business plans that did not fit in with overall Government policy objectives.Mwinga recommended that SOEs submit progress reports on their business activities to the council every time the council sat (the bill proposes at least four times a year), or at least every six months.Besides the Namibia Chamber of Commerce, which said its submission was compiled with the input of the private sector, Mwinga was the only economist and private-sector representative to comment on the bill to the National Council committee.The hearings ended on Friday.The committee is expected to table its report on the hearings to the National Council by next week.The National Council only has 90 days to review and agree or reject a bill passed by the National Assembly, else it could lapse.In the case of this bill, the Council has until March 5 to pass judgement.Mwinga told a National Council select committee on Friday that the controversial bill, which was up for public discussion last week, should not be seen in the narrow context of fighting corruption and dealing with inefficiencies only.”The reason why SOEs have not been successful is because Government has not taken an active role in managing and monitoring SOEs,” said Mwinga.The bill, he said, was not all bad, and he viewed it as Government taking control over managing the economy better.He disagreed with CEOs of parastatals who told the hearing that the law would affect the autonomy of the institutions and the duties of CEOs and boards of directors.As the main and in many cases the sole shareholder, Government was entitled to know more about and direct the business activities of SOEs, said Mwinga.He told the committee that it had to consider that Government needed to use the more than 50 public enterprises at its disposal to boost economic growth and reverse high unemployment and poverty.SOEs had to satisfy a complex and often conflicting range of political, economic and social objectives.The bill had to be seen in this light, he said.However, Mwinga did criticise some provisions of the bill in its current form.He recommended that the Governance Council be accountable to Parliament rather than to Cabinet, saying parliamentarians were the custodians of public assets and a better system of checks and balances had to be put in place when it came to overseeing parastatal performance.”Parliamentary oversight is critical and crucial in ensuring the efficiency and effectiveness of SOEs,” said Mwinga.Parliament is excluded totally from the bill in its current form, and has no role to play in monitoring the performance of SOEs.Mwinga said Parliament should be keeping Ministers responsible for SOEs in check.In his view, a council compromised only of Cabinet Ministers could result in too much political interference.Rather than the Prime Minister heading the Governance Council, the council should report to the premier, advised Mwinga.”You can’t be a player and the referee,” he remarked on the role the bill currently proposes for the Prime Minister.Mwinga also recommended that the Minister of Trade be excluded from the council, and that besides the Minister of Finance, the Attorney General and the Director General of the National Planning Commission, three or more competent professionals such as accountants, private-sector individuals and academics should be appointed to the Governance council.The National Union of Namibian Workers also told the council on Friday that the Governance Council had to appoint a wider range of people more representative of the social sector.Mwinga said as a shareholder,
Government was well within its rights to demand that SOEs furnish it with business plans, budgets and investment intentions.”They are the shareholder.How else must they know what’s going on.I have worked in the public and private sector.I know of business plans that are drawn up and put in the cupboard and never get looked at again,” said Mwinga.He felt that remarks by parastatal representatives, who maintained the council would not be able to handle the workload along with their daily duties, were unjustified at present and could only be determined once they got down to business.Although agreeing with other company representatives who argued that the nature of the investment market dictated that they act promptly and they could not be expected to obtain Ministerial approval first, Mwinga said other measures could be put in place which would keep the Governance Council abreast of budgetary and investment developments.He also proposed that an investment policy be approved by the Finance Minister, spelling out the types of investments that could be made with public funds.Mwinga said it was important that Government kept a closer eye on SOE budgets and business plans than it had been doing, because it was evident that some enterprises did not know what to do with surplus funds.He said while Government often had to scrounge around to borrow money for development projects, the cash surplus some SOEs were hanging on to could be used for this purpose.SOEs also prepared budgets and business plans that did not fit in with overall Government policy objectives.Mwinga recommended that SOEs submit progress reports on their business activities to the council every time the council sat (the bill proposes at least four times a year), or at least every six months.Besides the Namibia Chamber of Commerce, which said its submission was compiled with the input of the private sector, Mwinga was the only economist and private-sector representative to comment on the bill to the National Council committee.The hearings ended on Friday.The committee is expected to table its report on the hearings to the National Council by next week.The National Council only has 90 days to review and agree or reject a bill passed by the National Assembly, else it could lapse.In the case of this bill, the Council has until March 5 to pass judgement.