Former finance minister Calle Schlettwein has warned that a new task force reviewing state-owned enterprise salaries will fail without strict implementation and broader structural reforms.
He says this exercise previously failed due to poor implementation and SOEs regrading themselves after changes were made.
Prime minister Elijah Ngurare last week appointed an 11-member task force to spend three months reviewing salary structures, board remuneration and executive recruitment across public enterprises.
Schlettwein, who served from 2015 to 2020 when SOEs resorted under his ministry, says the government has in the past attempted to review SOE salaries.
“We tried to limit salaries by creating categories for SOEs, with maximum salary levels for each category. But that system also failed because SOEs managed to regrade themselves and always strived for the top category,” he told The Namibian yesterday.
Schlettwein said a commission, chaired by former fisheries minister Helmut Angula, recommended that SOE chief executives not earn more than permanent secretaries (now executive directors).
“It was approved but never implemented. Shortly afterwards, salaries well above that level were approved,” he said.
He warned that recommendations alone would not change anything.
“So I am quite excited about this task force announced by the prime minister. To what extent it will be successful, we will have to see. The task force is one thing, but implementation is another. It is not only the CEO’s salary that needs attention. It is the entire salary structure of a state-owned enterprise that needs to be reviewed. If you only change the CEO’s salary, you have done very little,” he said.
Schlettwein said most state-owned enterprises have failed to meet their targets despite paying low salaries. He said only two SOEs were profitable during his tenure, while the rest continued to operate at a loss.
The latest review comes after years of concern over executive pay at public enterprises.
In 2010, the Cabinet considered proposals to standardise salary packages for SOE executives.
Six years ago, a high-level panel on the Namibian Economy also recommended reviewing remuneration for SOE boards and CEOs to improve efficiency and reduce dependence on government support.
Last year, minister of urban and rural development James Sankwasa again questioned why some SOE chief executives earned more than presidents and ministers.
Former minister of public enterprises Leon Jooste in 2018 warned that SOEs were spending N$6.1 billion on salaries while many continued to miss their targets.
THE REAL ISSUE
Jooste yesterday told The Namibian the current administration is focusing on the wrong issue.
“High salaries may be a problem, but they are not the problem. Poor performance is the problem. If these entities met expectations as far as performance is concerned, we would probably not be having this discussion,” he said.
Jooste said weak governance is the real cause of poor performance.
“In many cases, weak boards without the required skills, experience and integrity are appointed. Those boards appoint the wrong CEOs, and those CEOs appoint the wrong executives,” he said.
During his time as minister, Jooste proposed linking executive pay to performance.
He said the legal framework for such a system already exists.
Corporate governance expert Johan Coetzee doubts the review would reduce the salaries of executives already employed.
“People are appointed based on service contracts. That means you cannot simply lower the salaries of people who are already appointed. In effect, nobody is going to receive less pay,” he says.
He also asks whether the exercise repeats work already done.
“I remember former minister Leon Jooste also looked at state-owned enterprises and, since he left, nothing much has happened. So this could be a duplication,” he says.
PROMISES GATHERING DUST
Regulations are currently governed by the Public Enterprises Governance Act (Pega), which came into force in 2019.
The parliament is considering amendments to this act.
The proposed amendments, tabled by Ngurare last year, would give him the power to decide whether members of SOE boards can serve a third term.
The amendments would also transfer broad powers previously held by the ministers responsible for public enterprises and finance to the prime minister.
Finance minister Ericah Shafudah last year said the changes would transfer oversight of many public enterprises from the central government to line ministries.
When president Netumbo Nandi-Ndaitwah took office, oversight of 26 public enterprises moved to line ministries.
Namibia currently has 77 public enterprises.
Independent Patriots for Change leader in parliament Immanuel Nashinge says he is not convinced the latest task force would produce different results.
“We have an amended Pega bill on the floor of parliament, but we have not seen anything in line with what the prime minister has done by appointing this task force. There are just too many appointments every other day,” he says.
Nashinge also questions the task force membership.
“We are seeing chief executive officers of state-owned enterprises on the task force. One wonders whether they would support salary reductions,” he says.
He says salary reform alone will not fix public enterprises.
“The best outcome would be implementation. Otherwise, this will become another report that gathers dust,” he says.
Popular Democratic Movement member of parliament Inna Hengari says the government has a tendency to rely on task forces and advisory bodies.
The task force, which will operate from 1 July to 30 September, includes former education minister Itah Kandjii-Murangi, reverend Tshapaka Kapolo, former Roads Authority chief executive Conrad Lutombi, Fluksman Samuehl, commissioner Habatte Doeses, former The Namibian managing editor Tangeni Amupadhi, Aletha Frederick, Aino Mukwiilongo, Tanja Jacobie, and Mathew //Gowaseb.
