Our parastatals - whose interests do they serve?
For years and years, Namibia’s State-owned Enterprises (SoEs), commonly known as parastatals have made headlines for all the wrong reasons. Just as we thought it could not get any worse, news about inflated board fees and management packages have hit the headlines again.
The board of the Social Security Commission (SSC), which is supposed to ensure basic social protection for working Namibians, not only remunerates itself lavishly but still demanded to be bought Apple iPad tablets while the management of NamPower, TransNamib, Agribank, Polytechnic and others pays itself way more than provided by the SoE guidelines. At the same time, most parastatals have failed to submit proper reports and audits.
These developments are outrageous not only because a small self-serving elite seems to find nothing wrong with further enriching themselves at the expense of the general public but also because the abuse continues despite a legal basis, which would allow Government to stop it. The SoE Governance Act of 2006 established an SoE Governance Council, which is headed by the Prime Minister and has the ministries of Finance, Trade and Industry, the Attorney General and the director-general of the National Planning Commission (NPC) as members.
The council has wide powers to determine common broad-based policies for all SoEs on corporate governance, investments as well as remuneration of CEOs, senior managers and board members. It is also responsible for developing mechanisms to monitor their performance, to facilitate training for board members and managers on corporate governance and efficient management practices. The council can lay down directives for SoE boards and managers. The Act further requires performance agreements to be entered into between the responsible minister and the individual board members.
SoEs are grouped into four broad categories; regulatory enterprises, service-rendering enterprises, economic and productive enterprises and general enterprises. In August 2011, the SoE remuneration framework was gazetted to guide Government and SoEs when drawing up contracts. Thus, the legal framework for SoE reforms has been established but the political will to effect the necessary changes still seems lacking and makes a mockery out of the regulations. Government needs to put its foot down and reign in the lavish board fees and management packages and those who are not willing to accept more modest conditions should be told that they are free to leave. The old song of having to pay exorbitant amounts to retain skills needs to be exposed as being just self-serving propaganda. In many cases, the payments received by board and management has no relation to performance.
We should remember SoEs entrusted with delivering important services perform important developmental functions and should be judged by criteria of “social efficiency”, such as how they deliver good quality services as cheaply as possible to make them affordable for all. In such cases, a subsidisation by Government can be justified but not if it is spent on inflated board fees and management packages! Social efficiency can be promoted by retaining public ownership as privatisation would be a false solution. Privatising service-rendering parastatals would be tantamount to “throwing the baby out with the bath water”, as private business operates on a profit motive, which would de facto excluding the poor from receiving the services. A democratically elected government certainly has a developmental role to play and the provision of affordable services of good quality is certainly part of that mandate.
Government now has to show some political will and determination to systematically deal with abuses of power and self-enrichment at parastatals. The SoE Governance Council can effect the necessary changes, which should include:
A systematic reduction of board fees and management packages and the introduction of a transparent performance-based remuneration system for managers. The current practice of rewarding even incompetent managers with huge remuneration packages and multi-million dollar severance pay must end.
SoE managers and board members alike need to be chosen carefully, based on skills, performance, dedication and competence. They also need to be held accountable for their actions as Government cannot be expected to bail them out whenever they drive SoEs into ruins and then reward themselves handsomely in the process.
SoE board members should be given the much needed governance training to effectively perform their oversight functions and to direct management without interfering in the day-to-day operations.
SoEs need to be strictly monitored to avoid conflict of interests, corruption and self-enrichment.
Overall, many Namibia’s parastatals have failed to live up to expectations and certainly need to perform better. The specific type of intervention required at the 72 parastatals may differ from one SoE to another, but there are some common problems that need to be confronted, head-on. Unless this is done, parastatals will continue to fail to reach their developmental objectives and remain subsidised playgrounds for self-serving elites. The time has come for Government to act decisively!