THE proliferation of parastatals is a major contributing factor to the country’s spiraling indebtedness and if our leadership is to borrow a leaf from revered development economist, Joseph Stiglitz, wisdom should be placed on the role of State intervention in the economic development within the contours of socio-economic and political circumstances.
The formation of the Public Enterprises Ministry would logically have placed the taxpayers at ease that the Government would not widen the risk of the country’s national debt with the formation of financially liable parastatals which are a duplicity of similar institutions with similar functions.
Under the current tough global economic conditions, it does not make sense why Government would worsen its indebtedness by adding another parastatal, Namib Desert Diamonds (Namdia) to its existing 87 state-owned enterprises.
Namib Desert Diamonds (Namdia), a 100 percent owned state owned company, born out of an agreement and diamond giant De Beers earlier this year will duplicate the functions of already existing similar parastatals.
Namdia will purportedly serve as a diamond sales and marketing arm of the Government into the international market, but its emergence was shrouded in secrecy with reports that Namibian diamonds were being deliberately undervalued at home and sold at high stakes abroad. The difference of much needed foreign revenue ends up in foreign accounts of corrupt greedy individuals.
Apart from the cloud of secrecy surrounding Namdia’s modus operandi, the concern to the overburdened taxpayers is the increasing costs of footing the bill of the creation of another wasteful entity.
Since Government issued a decree against issuing Government guarantees to SOEs, Government guarantees have been spiralling at N$817 million after it has been pumping nearly N$13 billion to parastatals since 2008.
In contrast, parastatals or State-owned enterprises have paid dividends of more than N$800 million into state coffers since then while the majority of non-performing parastatals owes government hundreds of millions in unpaid taxes.
Government guarantees on loans to parastatals, the private sector and black farmers amounted to more than N$10.7 billion in recent years. Government issues three types of loan guarantees: – Domestic (non-farm) guarantees that cover local financiers of private and state institutions, – Domestic farm guarantees for loans the government underwrites specifically for black farmers under the Affirmative Action Loan Scheme administered by the Agricultural Bank of Namibia, – Foreign guarantees offered to outside financiers of state-owned enterprises. Parastatals gobble up most of the loan guarantees, subsidies and equity.
In light of these risks, the newly established Ministry of Public Enterprises ought to draw its attention and efforts to reform the parastatals rather than adding a financial burden to our strained resources.
Reform of our state-owned companies ought to be both about addressing their financial vulnerabilities, long-term investment and broadening participation in our economy. As custodian of the country’s national resources, Minister of Public Enterprises should intervene in dodgy schemes that are aimed to deprive the state coffers of much needed foreign revenue. Minister’s Jooste’s counterparts cannot just wake up the following day to establish such costly SOEs without informing him as he bears statutory obligation to any parastatal.
Confidente. Lifting the Lid. Copyright © 2015