Parastatals warned to deliver the goods

THE days are numbered for State-owned enterprises that await annual Government handouts without being able to produce the goods.

Finance Minister Saara Kuugongelwa-Amadhila issued a stiff warning to SOEs during her annual Budget speech last week, saying that in future subsidies will be targeted and conditional on specific outcomes. “In the future, SOEs will no longer receive a general support from the Government,” she said.”If Government deems that an SOE is failing to perform, it must urgently intervene to ensure the return to prudent management,” said Kuugongelwa-Amadhila.She said she looked forward to the final version of the SOE bill, which was passed by both houses of Parliament last year, so that her Ministry in conjunction with the SOE Governance Council could push for the adoption of investment, procurement and dividend policies to ensure that the State’s interests are secured in all SOEs.The Minister said if SOEs were considering partnerships with the private sector, Government should not lose its ability to determine policy and obtain market-related prices for its assets.”Any proceeds from the sale of Government assets – be it shares or infrastructure, may not be used to balance the operational budgets, but must be earmarked for strategic purposes like the redemption of public debt,” said Kuugongelwa-Amadhila.She singled out Agribank, the Development Bank of Namibia and the National Housing Enterprise, which she said had a special role to play in the economy and it had to be ensured that they operated on commercial principles while at the same time increasing their efficiency.Kuugongelwa-Amadhila used the NHE as an example, saying that the number of houses completed with its budget needed to be increased.Also, the DBN needed to lend substantially more to remain profitable but required more capital to extend its loan book.To date, as the only shareholder, Government has granted the Development Bank capital of N$388 million.Its assets should increase further when those of the Namibia Development Corporation (NDC) are transferred to the bank.So far the DBN has received 94 loan applications for projects valued at N$2,6 billion.The bank was required to fund N$1,7 billion of this amount and aims to advance a further N$120 million during this year.Kuugongelwa-Amadhila also reiterated the importance of Agribank in promoting agricultural and land reform in Namibia.She noted steady improvement in the bank’s performance and said once the bank had acquired more resources, it would better be able to fulfil its objectives of sustainable land acquisition.”In the future, SOEs will no longer receive a general support from the Government,” she said.”If Government deems that an SOE is failing to perform, it must urgently intervene to ensure the return to prudent management,” said Kuugongelwa-Amadhila.She said she looked forward to the final version of the SOE bill, which was passed by both houses of Parliament last year, so that her Ministry in conjunction with the SOE Governance Council could push for the adoption of investment, procurement and dividend policies to ensure that the State’s interests are secured in all SOEs.The Minister said if SOEs were considering partnerships with the private sector, Government should not lose its ability to determine policy and obtain market-related prices for its assets.”Any proceeds from the sale of Government assets – be it shares or infrastructure, may not be used to balance the operational budgets, but must be earmarked for strategic purposes like the redemption of public debt,” said Kuugongelwa-Amadhila.She singled out Agribank, the Development Bank of Namibia and the National Housing Enterprise, which she said had a special role to play in the economy and it had to be ensured that they operated on commercial principles while at the same time increasing their efficiency.Kuugongelwa-Amadhila used the NHE as an example, saying that the number of houses completed with its budget needed to be increased.Also, the DBN needed to lend substantially more to remain profitable but required more capital to extend its loan book.To date, as the only shareholder, Government has granted the Development Bank capital of N$388 million.Its assets should increase further when those of the Namibia Development Corporation (NDC) are transferred to the bank.So far the DBN has received 94 loan applications for projects valued at N$2,6 billion.The bank was required to fund N$1,7 billion of this amount and aims to advance a further N$120 million during this year.Kuugongelwa-Amadhila also reiterated the importance of Agribank in promoting agricultural and land reform in Namibia.She noted steady improvement in the bank’s performance and said once the bank had acquired more resources, it would better be able to fulfil its objectives of sustainable land acquisition.