DUMPING State-Owned Enterprises into foreign control is not only a reckless hindsight but its tantamount to mortgaging the future of our next generations which potentially leads to massive job losses.
Essentially, the economic hardships should not pressure us to take harsh decisions with regrettable consequences and there it is pivotal for us to rather tighten our belts instead of randomly shutting down SOEs, or dare to mortgage our hard-earned assets into foreign control. The quandary at the Roads Contractor Company (RCC), which is poised with closure or face the threat of being substantially bought out to a Chinese stakeholder, is an issue that our policymakers ought to consider carefully to avoid catastrophic consequences which will leave us in self-disgust in the future.Let us not forget that apart from providing the much needed 300 jobs, the RCC provides essential public goods and services such as the construction and maintenance of our roads.
We have already endured the closure of the SME bank, a partially state-owned entity, which has forced more than 200 Namibians to lose their jobs when the responsible authorities could have merely addressed the suspected disappearance of nearly N$175 million that the bank supposedly invested in South Africa.
Private companies, according to the office of the Labour Commission, have already retrenched 781 workers over the final quarter of the last financial year due to the volatile economic climate experienced in the country.
It is also essential to realise that the closure of SOEs, particularly the SME bank only favours most of the South African controlled banking institutions that use Namibian depositors to grow the South African economy. It is not in the country’s interests to insist on the liquidation of struggling SOEs and a better option should be to opt for alternative options to make ailing SOEs economically viable instead of allowing them to succumb to ill management leaving their respective industries monopolised by South African giants and their Namibian agents.
The large economies in the world, like China, did not begin to liquidate their parastatals when restructuring of SOEs came.
Since economic reform and opening-up policies began in 1978, China’s SOEs have undergone a long process of gradual and progressive transformation.
The transitional difficulties were made less disruptive because China maintained rapid economic growth and established basic social security, medical services, education, housing and other safety-net arrangements. Concurrently, and more positively, many large SOEs in key and strategic sectors have been successfully transformed, from inefficient production units operating under the state’s economic plan, into profitable, incorporated business entities, for which appropriate corporate governance structures are being gradually implemented.
The relative economic weight of the state sector has declined substantially as successive reforms have increasingly opened up more industrial sectors to competition from non-state enterprises. The share of SOEs in the country’s gross industrial output, for example, fell from half in 1998 to one quarter in 2011.
The number of SOEs owned by the central government has fallen from 196 in 2003 to 115 in March 2013. But many smaller SOEs are still owned by different levels of sub-national (local) government, many of which adopt policies that still discriminate in favour of local companies. Despite the dramatic restructuring of Chinese enterprises, the subsequent successes of the large Chinese SOEs have become a source of friction between China and some of its trading partners, as these companies have become increasingly formidable competitors in both the Chinese and global markets.
The liquidation of the SOEs is not the lasting solution especially in this economic climate where private companies have been retrenching people en masse.
The government should continue, therefore, to have an important role to play in resolving the transition problems in our SOEs. The dividing line between government and enterprises should continue to be delineated more clearly. In the long term, the government would do well to focus on providing public goods and services and ensuring a level playing field for all types of enterprises.
The state could pursue its macroeconomic strategies and achieve its goals through industrial policies, effective regulations and law enforcement, without having to be involved in the management of enterprises.
Confidente. Lifting the Lid. Copyright © 2015