Govt news agency ‘insolvent’, not given necessary support

THE future of Government’s news agency might be in doubt if the cash-strapped parastatal does not get a much-needed financial injection soon to operate as a commercialised entity, the Auditor General’s office has warned.

The Namibia Press Agency (Nampa) made a net loss of N$1,71 million in the financial year ending March 31 2005, some N$352 000 more than the previous financial year despite trimming expenditure, according to the report, which was tabled in the National Assembly. Nampa further owes the Receiver of Revenue N$1,29 million for Pay as You Earn (PAYE) contributions deducted from employees’ salaries, and a further N$ 599 744 in value added tax (VAT) payments during the year under review.”The news agency is currently experiencing cash-flow difficulties and the settlement of these debts may lead to going-concern difficulties,” said Auditor General Junias Kandjeke.He said Nampa informed his office earlier this year that it had paid all outstanding VAT returns in the meantime.”However, due to cash-flow problems, monthly payments for VAT and PAYE cannot be made.”The dire situation Nampa found itself in was blamed on a lack of Government commitment to provide more money to turn the agency into a commercialised entity, as was planned in 2001.”The shareholder, who is the Namibian Government, never funded the news agency to carry out commercial operations other than to carry the basic core functions,” the Auditor General noted.”The shareholder has continuously ignored the request to invest in the agency to enable it to make money.The news agency is commercially insolvent,” Kandjeke added.The situation has worsened because Nampa could not take out a loan to kick-start the commercialisation process because it had no assets to use as security.The Government subsidy for Nampa amounted to N$7,98 million during the financial year under review (N$6,58 million the year before), while total income was N$10,5 million, mostly subscriptions from news media.However, operating costs amounted to N$12,2 million between April 2004 and March 2005, leaving a net loss of N$ 1,71 million.”This casts significant doubt on the news agency’s ability to continue as a going concern.Its future might be doubtful if an urgent strategic re-think is not undertaken,” Kandjeke said in his report.Surprisingly, expenses for board members increased by 82 per cent from N$30 531 to N$55 500 during the year under review.Approached about the report, Nampa’s Chief Executive Officer, Hamunime Nghidinwa, said a solution might be on the horizon in due course.”We have been in consultations with the Ministry of Information as well as the Ministry of Finance for some time now,” Nghidinwa told The Namibian.”Cabinet directed the two ministries to provide funding for the commercialisation process.The lack of funding is crippling our operations, but we hope to find a solution soon,” Nghidinwa added.Nampa further owes the Receiver of Revenue N$1,29 million for Pay as You Earn (PAYE) contributions deducted from employees’ salaries, and a further N$ 599 744 in value added tax (VAT) payments during the year under review.”The news agency is currently experiencing cash-flow difficulties and the settlement of these debts may lead to going-concern difficulties,” said Auditor General Junias Kandjeke.He said Nampa informed his office earlier this year that it had paid all outstanding VAT returns in the meantime.”However, due to cash-flow problems, monthly payments for VAT and PAYE cannot be made.”The dire situation Nampa found itself in was blamed on a lack of Government commitment to provide more money to turn the agency into a commercialised entity, as was planned in 2001.”The shareholder, who is the Namibian Government, never funded the news agency to carry out commercial operations other than to carry the basic core functions,” the Auditor General noted.”The shareholder has continuously ignored the request to invest in the agency to enable it to make money.The news agency is commercially insolvent,” Kandjeke added.The situation has worsened because Nampa could not take out a loan to kick-start the commercialisation process because it had no assets to use as security.The Government subsidy for Nampa amounted to N$7,98 million during the financial year under review (N$6,58 million the year before), while total income was N$10,5 million, mostly subscriptions from news media.However, operating costs amounted to N$12,2 million between April 2004 and March 2005, leaving a net loss of N$ 1,71 million.”This casts significant doubt on the news agency’s ability to continue as a going concern.Its future might be doubtful if an urgent strategic re-think is not undertaken,” Kandjeke said in his report.Surprisingly, expenses for board members increased by 82 per cent from N$30 531 to N$55 500 during the year under review.Approached about the report, Nampa’s Chief Executive Officer, Hamunime Nghidinwa, said a solution might be on the horizon in due course.”We have been in consultations with the Ministry of Information as well as the Ministry of Finance for some time now,” Nghidinwa told The Namibian.”Cabinet directed the two ministries to provide funding for the commercialisation process.The lack of funding is crippling our operations, but we hope to find a solution soon,” Nghidinwa added.