State-owned entities are forking a total of N$8,5 billion per annum for salaries alone, despite a horde of them failing to make profits, minister Leon Jooste has disclosed.
Jooste was speaking at the recently held public enterprises’ conference held at Walvis Bay.
The conference sought to find ways to rescue the situation at public entities and brought together public and private players.
According to Jooste, state entities were paying billions in wages to a total of 17 464 employees and he said this translated to 28% of the total Public Enterprises expenditure of N$30 billion per annum.
Jooste also said that this figure was beyond the average 27% of other African countries and of concern to the Ministry.
The minister also said for the 2018/19 financial year alone, Public Enterprises received a total allocation from the budget of N$4,024 billion.
He said Public Enterprises in Namibia were created to amongst others provide public goods; generate public funds; increase access to public services (while maintaining efficiency and effectiveness), and accelerate economic development and industrialization.
“It is only once one understands what is wrong and what has caused it that one can conceptualize appropriate solutions. The Ministry has, therefore, analyzed the core reasons for the failure of Public Enterprises and determined that the core reasons are as follows: inappropriate governance/ownership models (decentralized and then a dual-governance system), an inappropriate legal framework and not equipping Line Ministries with specific specialized skills to perform the functions of a professional shareholder,” said Jooste.
He added, “But what is even more concerning is the fact that Commercial Public Enterprises, entities that are supposed to be profitable, received N$1.41billion,” said Jooste.
But there has been a good turn of events at state entities too, the minister told delegates citing that the profitability of Commercial Public Enterprises improved from N$840 million to N$1.9 billion from 2016/17 to 2018/19.
He said that of the financial institutions and extra-budgetary funds improved from N$633 million to N$760 million over the same period.
“Non-Commercial Public Enterprises showed an improvement of negative profitability of minus N$1.56 billion to minus N$1.45 billion. This gives us a total portfolio performance of an improvement from minus N$87 million to a positive N$1.21 billion,” said Jooste.
Jooste hailed the convergence of ideas between the private and public sector to deliberate on performance management for state entities.
“This makes perfect sense since the fundamental commercial principles are all very similar and are made up of the same elements. Something that makes me particularly happy is that we are taking this specific inclusive approach where the Ministry will ultimately own the outcomes of this conference together with you, our Public Enterprises,” he said.