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SOEsÔÇÖ accountability under scrutiny

Mon, 28 November 2016 14:08
by Aili Iilonga
News Flash

The Institute of Public Policy Research (IPPR) has dirty fingered commercial parastatals for outright theft and misappropriation of funds in its latest report on State Owned Enterprises (SOEs) Governance in Namibia.

The IPPR report, which was compiled by researcher, Mark Weylandt, insists that there is still little to no consequence for poor performance as well as the misuse of funds in SOEs.

“In a bitterly ironic turn, the worst offenders in this regard have been ‘commercial’ SOEs that are actually supposed to raise revenue for government rather than draining its coffers,” Weylandt says.

This, while Minister of Public Enterprises, Leon Jooste, deems it fit to explain at every available opportunity and turn that SOEs are set up to be self-maintaining entities to ease pressure on treasury coffers. 

“SOE are formed to make a profit for themselves and not to make revenue for the government but rather to offer services,” Jooste said.

At a time when public confidence in the affairs of SOEs is fast eroding like mist before the sun, Weylandt did not mince his words in his condemnation of alleged mismanagement, misappropriation and outright theft of funds.

He posited that in several high-profile cases, money has mysteriously gone missing after being invested with other companies.

The report cites cases in which funds had been misused without consequence.

“The notorious Avid, ODC, and GIPF scandals alone add up to almost N$700 million lost. More common is simple incompetence and mismanagement. After auditor findings that the SOE responsible for disbursing student loans could not account for N$2.7 billion, and had difficulty tracing debtors who owed the fund N$400 million, the Minister in charge of oversight attributed the problems to a recent move of the office, claiming files could have been lost in the process,” Weylandt lamented in the report. 

Economic analyst James Cumming concurred to the fact that SOEs have failed in recent years in their performances, but states ignorance on how government deals with parastatals to hold them accountable. 

“I believe that SOEs have been performing poorly over the years but I can’t comment on the fact as to why they are not held accountable for their actions,” he says.

Economist Dylan Van Wyk also collaborated Cumming saying that there seems to be very few consequences facing underperforming SOEs.

 “SOEs continuously receive bailouts from government, however, my feeling is these enterprises have had carte blanche under the dual governance model,” he said.

Van Wyk further emphasized that, “the commercial SOEs, which include Air Namibia and Namibian Wildlife Resort (NWR), are generally expected to be enterprises that generate sustainable profits, and should in my opinion, be judged on their profitability.”

He added: “According to Max Weylandt’s article the commercial SOE’s have historically been the worst offenders when it comes to costing the taxpayer money. The non-commercial and extra-budgetary funds, which include enterprises such as UNAM and the MVA, provide public goods and should be judged on service delivery rather than profitability.”

It is commonly opined in the public sector space that the state’s expenditure on SOEs shifts away the resources from vital capital transfers towards the expenditure on salaries and wages. 

Therefore, many SOEs experience high levels of debt as well as declining levels of capital productivity.

 

There has been an increasingly high state financial allocations mainly to sustain the high current expenditures related to the over-sized organisational and personnel structures of State Owned Enterprises.

The report also suggest that SOEs have made a relatively small contribution to the economy in terms of percentage contribution to the gross domestic product (GDP) as well as job creation. 

Jooste, in his first year in office, classified SOEs into three categories of commercial SOEs; financial SOEs; and extra- budgetary funds and noncommercial SOEs, all under the hybrid governance model.

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However, there is still lack in clarity over the classification of SOEs as the full list has not been provided yet.