Parastatals more like parasitals: IPPR

WIDESPREAD lack of openness and accountability is at the root of most parastatals’ continued dependence on taxpayers who have coughed up some N$4,7 billion over the last 14 years to keep these State institutions afloat.

This damning finding is contained in a study by the Institute by Public Policy Research (IPPR), which recently launched a database to monitor the openness and financial performance of the public sector enterprises. Daniel Motinga, who compiled the study, said that, despite the fact that openness was “a requirement” under the laws on which the parastatals were based, he had struggled to collect annual reports.By 1990, Namibia had 12 parastatals, according to the IPPR paper.The number had increased to 45 by last year, not counting the Development Brigade Corporation (DBC), which was set up to train and employ liberation war fighters.The research organisation said the mushrooming of parastatals since Independence was understandable because “there was a need to emphasise new priorities”.”Whilst the number of parastatals is rising, sound financial performance remains elusive for most,” Motinga wrote in the paper that he compiled for the IPPR.The organisation said Namibian parastatals needed to be regularly evaluated for performance and service delivery.Most parastatals claimed by telephone that they produced annual reports, yet the IPPR said it became clear from comparisons with actual reports “that fewer and fewer public enterprises prepare annual reports regularly”.Only 24 of the 45 State entities told the IPPR that they had produced annual reports by 2003.”However, we could only trace five annual reports,” said Motinga, who found that few parastatals had Websites and even fewer posted their annual reports on the Internet.”Evaluating the financial performance of parastatals is problematic.On the one extreme, there are parastatals such as NamPower and Telecom that operate as monopolists and are making huge profits.”At the other extreme there are parastatals that depend entirely on State transfers for their survival” and were making substantial losses,” the IPPR stated.The study includes parastatals ranging from higher education institutions such as the University of Namibia to the power utility, NamPower.In 1990, Government spent about N$80 million on parastatals.In financial years 2002-2003 and 2003-2004, nearly N$1 billion was budgeted for them.Instead of cutting costs in difficult times as private firms do, the IPPR said the “hypothesis [is] that State-owned enterprises are almost always likely to overstretch their limited resources because the likelihood of being bailed out by the State is greater than the risk of going bankrupt”.Most of Namibia’s parastatals “are just barely surviving”.Some, such as the Namibia Development Corporation (NDC), TransNamib and Unam, were consistently in the red ,based on reports between 1997 and 2000.NamPower, Telecom, Agribank, the National Housing Enterprise, Meatco and the Bank of Namibia consistently posted profits.But, Motinga said, firms with the profitability of NamPower, Telecom and the Bank of Namibia were aided by their monopoly status.The IPPR urged Parliament to demand greater transparency and public scrutiny of parastatals if the overspending and heavy reliance on taxpayers to bail them out were to be reduced.Daniel Motinga, who compiled the study, said that, despite the fact that openness was “a requirement” under the laws on which the parastatals were based, he had struggled to collect annual reports.By 1990, Namibia had 12 parastatals, according to the IPPR paper.The number had increased to 45 by last year, not counting the Development Brigade Corporation (DBC), which was set up to train and employ liberation war fighters.The research organisation said the mushrooming of parastatals since Independence was understandable because “there was a need to emphasise new priorities”.”Whilst the number of parastatals is rising, sound financial performance remains elusive for most,” Motinga wrote in the paper that he compiled for the IPPR.The organisation said Namibian parastatals needed to be regularly evaluated for performance and service delivery.Most parastatals claimed by telephone that they produced annual reports, yet the IPPR said it became clear from comparisons with actual reports “that fewer and fewer public enterprises prepare annual reports regularly”.Only 24 of the 45 State entities told the IPPR that they had produced annual reports by 2003.”However, we could only trace five annual reports,” said Motinga, who found that few parastatals had Websites and even fewer posted their annual reports on the Internet.”Evaluating the financial performance of parastatals is problematic.On the one extreme, there are parastatals such as NamPower and Telecom that operate as monopolists and are making huge profits.”At the other extreme there are parastatals that depend entirely on State transfers for their survival” and were making substantial losses,” the IPPR stated.The study includes parastatals ranging from higher education institutions such as the University of Namibia to the power utility, NamPower.In 1990, Government spent about N$80 million on parastatals.In financial years 2002-2003 and 2003-2004, nearly N$1 billion was budgeted for them.Instead of cutting costs in difficult times as private firms do, the IPPR said the “hypothesis [is] that State-owned enterprises are almost always likely to overstretch their limited resources because the likelihood of being bailed out by the State is greater than the risk of going bankrupt”.Most of Namibia’s parastatals “are just barely surviving”.Some, such as the Namibia Development Corporation (NDC), TransNamib and Unam, were consistently in the red ,based on reports between 1997 and 2000.NamPower, Telecom, Agribank, the National Housing Enterprise, Meatco and the Bank of Namibia consistently posted profits.But, Motinga said, firms with the profitability of NamPower, Telecom and the Bank of Namibia were aided by their monopoly status.The IPPR urged Parliament to demand greater transparency and public scrutiny of parastatals if the overspending and heavy reliance on taxpayers to bail them out were to be reduced.