Government has come under ﬁ re from leading economic analysts who have blamed it for sitting on the idea of partially listing beleaguered state-owned enterprises on the stock exchange.
Finance minister Calle Schlettwein presented the idea of helping stateowned enterprises to list when he presented his 2016 budget. With calls for the partial listing of state-owned enterprises having been made now and again, analysts indicate that while the Namibian bourse has its stringent requirement before any company can be listed government on its part lacks the political will to take the ﬁ rst step.
“I do not think it is so much from a point of view of the listing requirements, but I think it’s more from a point of view of the whole logistics around government coming to that point. Before we even decide are we going to do this, there should be a political will, there must be that will to push this forward,” opines Namibia Equity Brokers (NEB) analyst Ngoni Bopoto. Bopoto further afﬁrms that the current state-owned enterprises Act is an impediment to the implementation of the partial listing idea which does not empower the state-owned enterprises Minister to gather the balls to roll the ball.
“I once heard the Minister of Public Enterprises saying something like that; I think it was in the NPTH situation where he could not interfere because of the state-owned enterprises Act. “Now we need a central body for all this, the ministry of public enterprises should be doing this, but if he cannot interfere in some state-owned enterprises because of the state-owned enterprises Act then you can see that already from a legislative point of view he cannot even make that call and go beyond,” says Bopoto.
The public enterprises minister Leon Jooste has been in the media admitting that: “There is a necessity to urgently amend the Act to also give legitimacy to the hybrid governance model, which was approved by Cabinet in July 2016.” Bopoto advises that government should be acting on the options of identifying none core asserts and selling them off to the private sector completely since they have no bearing on the ability to deliver on government’s mandate to the people.
“Strategic asserts can be partially listed, the reason being that some of these asserts you do not want to put them in private hands, like NamWater and guys start selling up bottled water. There is thus that need to identify which asserts falls into which category. Then we would need to value these asserts,” he says.
Bopoto explains that the valuation procedure is the preliminary before engaging in the whole transaction process, “There will be bidding, auctioning, open tenders etc. Similarly, for the components to be listed there is need for preparing all the statutory paper work ahead in order for it to be presentable.” With the issue of government’s political will questioned Namibia Chamber of Commerce and Industry (NCCI) chief executive ofﬁ cer Tara Shaanika says government might still be weighing its options.
“I do not think government is being slow, you do not just wake up and list a company, the minister might be considering listing the companies. They need to engage professionals, ﬁ nd the market and see how it reacts. So listing is not a very simple and straight forward process, I do not think that from the 2016 budget speech to now there has been sufﬁ cient time to already start listing some companies,” he says.
Jooste was quoted last December as saying, “the discussion around listing state-owned enterprises on the stock exchange is ongoing and forms part of future state-owned enterprises reforms.” IJG Securities analyst Dylan van Wyk submits that this statement implies that, “listings are part of government’s long term exit strategy and will likely only follow after reforms have been completed.”
However, Quest Consult Analyst James Cumming afﬁ rms that the current collective political mindset in the echelons of leadership is still not convinced that partial listing of stateowned enterprises need to be prioritised despite many calls do so. “The biggest hurdle is on the political side, how to convince politically in people’s minds that this state-owned enterprises need to be listed. This will obviously take time; it needs a lot of time to get people convinced on policy changes. Once it is decided that we are going to list an enterprise then you will have all the practical staff that needs to be happening,” he says.
Cumming however is convinced that the bad reputation with which the state-owned enterprises are associated raises red ﬂ ags for any investor to have a keen interest to buy shares. “Then you have the listing requirements in terms of proﬁ tability and size of company, controls and good governance. The NSX would be happy that this company would enhance the reputation of the stock exchange. If you list rubbish, then the NSX gets a bad name,” he says.
Bopoto concurs, “The governance structure of state-owned enterprises must be revamped to be palatable to private investors particularly in the case of partial listings were co-investment takes place.” This has also been buttressed by van Wyk who opines that at present a majority of the state-owned enterprises do not come close to meeting the NSX requirements.
“I believe the largest barrier to listing the state-owned enterprises is that most of them simply do not currently meet the criteria for listing. Currently it is probably only NamPower which would qualify to be listed. The main obstacles for the other state-owned enterprises are proﬁ table trading records and audited ﬁnancial statements,” he says. He advises that “serious reorganisation has to take place in most of these entities before they can be sold to investors.