IT remains deplorable that the increasing inefficiency in Public Enterprises continues to put pressure on the country’s fiscus and Namibia stands to slip deeper into crisis unless the lust for loot is stopped.
A report shared by the Public Enterprise ministry this week, confirms that public entities continue to hurt economic recovery through perennial dependence on the government purse revealing that 49 of the 71 public enterprises remain loss making with shockingly low compliance ratings.
Essentially, for 2017/18 alone, Public Enterprises have received a total allocation from the budget of more than N$4 billion, whilst the total debt of our Public Enterprises is already about N$43 billion, which is 25% of GDP.
Apart from that the whole portfolio makes a loss of more than N$ 150 million per annum with the total wage bill unsustainably standing at about N$ 6.1 billion.
Surely, the buck must stop somewhere!
It is important to understand that Public Enterprises must play an important role in national economic development in which they represent the extended arm of government, providing key goods and services to the economy that would otherwise not be served by private enterprise as well as playing an important regulatory role.
Lack of timely reporting, monitoring, and scrutiny and often due to the limited enforcement of basis corporate governance principles should hence be tackled immediately to pave way for profitable Public Enterprises that remain less of a burden to the state and public at large.
It is also not far-fetched to say that the prevailing economic crisis sweeping through Namibia is a direct result of economic mismanagement largely shaped by the looting of state owned enterprises.
Many are in deep trouble. Sheer incompetence and corruption has pushed entities like RCC and the TranNamib closer to financial collapse. Serious questions are being asked about the ability of the corruption watchdogs to rein in on perpetuating corruption in Public Enterprises.
We have to fully acknowledge that improved parastatal performance is increasingly becoming crucial to the Namibian economy because of its macro-economic effects and because of the key sectors controlled by parastatals.
However, the well documented failures in Public Enterprises always have always categorised our public entities as epitomes of revenue level declines, escalating operational costs, diminishing market share and consequent financial loss. As if this was not enough, an acute lack of innovation, dilapidated infrastructure and out-dated equipment continued to contribute to escalating operating costs, high maintenance costs and unreliable service delivery. With these challenges seemingly irreconcilable, the government has stop allocating poorly run and non-compliant public entities billions of dollars in taxpayers’ money as bailout until the messes within these has been cleaned up.
This key responsibility and burden should be shouldered by, Public Enterprise Minister, Leon Jooste, who has all to do in ensuring that parastatals are not run in a manner that lacks accountability, credibility and institutional development. Finally, some state owned enterprises will need to be privatised. This is because they operate as monopolies in key sectors which is perpetuating gross inefficiencies. Only privatisation will end these distortions. For many years, government has claimed that Namibia’s many challenges could be overcome by adopting policies of a “developmental state”. This would entail active state involvement in economic activity and using its resources to tackle poverty and expand economic opportunities. But the on-going revelations show that even before Namibia can consider becoming a developmental state, it will first have to root out the ingrained predatory state. Only then can investor confidence begin to be restored, recovery restarted and rating downgrades reversed.
Confidente. Lifting the Lid. Copyright © 2015