GOVERNMENT spent more than N$12 billion to sustain the state-owned enterprises in subsidies and guarantees in 2017/18 alone.
About N$8,8 billion was in guarantees, while more than N$3,4 billion was in the form of subsidies, public enterpises minister Leon Jooste said yesterday.
Jooste said this when he addressed the the annual stakeholders’ meeting held in Windhoek which was allso attended by finance minister Calle Schlettwein.
The minister said government paid commercial SoEs a subsidy of N$868 million and gave a government guarantee of N$4,9 billion, while financial SoEs received subsidies of N$60 million and guarantees of N$3,6 billion, whereas non-commercial SoEs received N$2,5 billion subsidies and a government guarantee of N$322,5 million.
During the same period, Jooste said, his ministry was allocated just over N$4 billion. According to Jooste, SoEs made losses of more than N$150 million. However, the total value of their assets stood at N$91 billion.
By the end of last year, SoEs debt was N$43 billion, about 25% of GDP.
Sixty-seven percent of the N$43 billion is owed by commercial state-owned enterprises (SoEs), while non-commercial entities owe 17% and financial institutions 16%.
Parastatals in the energy, transport, communications, water, education and financial sectors represent 90% of the total entities’ assets.
Revealing this information, public enterprises minister Leon Jooste stressed that the N$6,1 billion wage bill is not sustainable at the present level of performance and financial results coming from SoEs even though the idea for government is to pay market-related salaries.
“This situation is unsustainable, reflects low levels of accountability and warrants critical targeted interventions by government and an entirely new mindset,” Jooste said.
Speaking at the ministry’s annual stakeholders address in Windhoek yesterday, Jooste said since independence, most PEs have failed to deliver on the mandate they were created for.
“As an example, instead of SoEs supporting the generation of revenue for the state, they have become a burden to the state by depending on annual government subsidies and guarantees to sustain their operations,” he said.
As of December 2017, Namibia had over 300 public enterprises, of which 71 are listed as public enterprises. From these 71 entities, 38 have the potential to be classified as non-commercial, 22 as commercial and 11 as financial institutions.
When looking at the compliance ratings, all SoEs only had a 27% compliance rate for audited financials, 20% for governance agreement, 25% for performance agreement and 48% for business plans.
“Some SoEs will be unable to borrow their way out of their financial difficulties, at a time when the ability of the shareholder to fund ‘bail-outs’ is constrained, and thus the urgent need for consultative processes to review the funding and business models of these distressed SoEs.
“Business plans will be thoroughly evaluated, and we will not allow for ‘unbankable’ business plans to be approved,” Jooste said.
