Government can’t analyse financial statements- Jooste … as he urges for more professionalism
State owned enterprises minister, Leon Jooste, has said there can not be logic behind calling upon public enterprises to submit annualised financial statements when their shareholder was not in a position to analyse them.
Jooste was speaking at a business breakfast on State Owned Enterprises: Urgency for Reform where he noted that government has to blame itself for encouraging a culture of non-performance at SOEs.
“We have not managed to be professional shareholders of state owned enterprises. What we blame public enterprises for is what we ourselves caused,” said the minister in his presentation.
The minister, who was at pains to use diplomatic language in painting the somber picture of the country’s failing public entities, pin-pointed that the “bail-out culture” was allowed to perpetuate by the shareholder.
“In Australia, government does not bail out SOEs, they instead lend them on interest,” he said.
Jooste said attempts to close taps over wanton allocations to SOEs have been met with resistance which he said was a natural phenomenon that comes with what he called, “human nature”.
He hinted, however, that, had his ministry gotten its way without legislative shortcomings, progress would have long been made in remedying the loss-making syndrome within SOEs.
“We need a law. I anticipate that it would be promulgated very soon,” said the minister.
Jooste has more than once raised the point that the enabling Act does not fully capacitate him to exercise full powers over the entities under his stewardship.
He has also said government need not be a passive shareholder that does not actively participate in the running of SOEs.
“We don’t have the knowledge to be an active shareholder,” he said before urging against approving poor business plans.
He also added, “We must work with the boards and management and see what’s feasible.”
The minister has also made revelations that the public enterprise debt alone was 25% of the country’s Gross Domestic Product (GDP).
Meanwhile, government guarantees to public institutions are estimated at 6% of GDP, a situation which the minister said needs to be revised.
“We have a problem with government guarantees to SOEs. We need a policy on when we can issue government guarantees. Currently, it’s an ad-hoc case by case situation.”
With the economy tittering on the edge in this recessionary environment, the Economic Association of Namibia (EAN) has said: “Political will and commitment to reform SOEs should be duly recognised and credited, continued reliance of SOEs on state resources remain worrying.”
“Unfortunately, the history of Namibian SOEs entails cases of mismanagement, fraudulent activities, subsidies and bailouts from state coffers, as well as general ineffectiveness in preforming their duties. In 2006, the Government implemented a number of governance reforms to resolve these issues, most of which failed to produce effective management and operational improvements of such entities,” EAN laments.