Why Bureaucrats Should Stay Out of Business

State-owned enterprises (SOEs) are established to drive economic development, deliver essential services and stimulate growth. Yet across many African countries they have instead become synonymous with inefficiency, taxpayers-funded bailouts and persistent scandals.

While political interference, unclear lines of authority structures and confused roles are often highlighted as core problems, leadership remains an equally critical factor – beginning with the appointment of board members, the design of management structures, and staffing decisions.

Bureaucrats play an important role in society, but not in business; their strength lies in serving as dedicated public servants focused on delivering quality public services.

There is strong evidence that even highly capable public officials often struggle to successfully manage municipal commercial activities or SOEs.

Numerous national airlines, rail networks and transport companies, forestry and agricultural marketing bodies, tourism enterprises, hotels, housing parastatals, and road-construction entities across Africa stand as examples of this recurring pattern.

Just consider the poorly managed and deteriorating state of many enterprise centres and business parks across Namibia’s 14 regions, whether overseen by an SOE or by local authorities.

Namibia has a particular large number of SOEs yet identifying even a dozen that consistently meet their mandates without relying heavily on taxpayer support remains difficult.

Public enterprises frequently make headlines for the wrong reasons, and the finance minister’s annual budget speech routinely includes millions allocated to SOEs on the brink of collapse.

Some progress has occurred where government created stand-alone agencies outside the restrictive influence of ministries – such as the Namibia Revenue Agency and Business and Intellectual Property Authority – allowing them to adopt more modern mindsets, supported by management teams drawn from the private sector.

Some argue that they are not performing as well as the public relations departments will have us believe.

However, it is factual that staff at these entities have become more professional, helpful and efficient thereby making processes such as handling tax and customs matters or registering a business far smoother than before.

If neither shutting down SOEs nor wholesale privatisation is the answer, the question becomes: what is the viable path forward?

In a small economy like Namibia, public enterprises remain essential for delivering services not otherwise available, and for creating economic opportunities and jobs – especially in underserved regions.

Like any business, their success depends on focused leadership and accountable, high-performing management that shapes an effective staffing system.

The problem with appointing bureaucrats to run commercial public enterprises does not lie in the individuals themselves, but in the systemic conflict of interests and misaligned incentives that undermine performance.

Bureaucrats should not oversee SOEs or be appointed to their boards, and public enterprises should not be used as avenues to reappoint underperforming politicians or create financial opportunities for their associates.

Their poor performance in business is not a reflection of incompetence, but rather the result of conflicting objectives and distorted incentives that can hinder and demotivate even highly capable and committed public officials.

Public entities with commercial goals perform far better when led, managed and staffed by individuals with business-oriented mindsets, rather than continuing to depend on repeated taxpayer bailouts.

And this is why bureaucrats should refrain from running businesses and instead focus on what they excel at – serving as dedicated civil servants who deliver quality public services.

• Danny Meyer is reachable at danny@smecompete.com

In an age of information overload, Sunrise is The Namibian’s morning briefing, delivered at 6h00 from Monday to Friday. It offers a curated rundown of the most important stories from the past 24 hours – occasionally with a light, witty touch. It’s an essential way to stay informed. Subscribe and join our newsletter community.