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Political appointees fail public enterprises - experts

12/10/2017
by Rodney Pienaar
Business

Following the rejection of TransNamib’s business plan last week, experts speaking to The Villager have said that the failure of state-owned enterprises can be attributed to incompetent leadership.

Experts who spoke to The Villager said that there is danger in appointing public enterprise leaders based on political relationships, as often they do not possess the knowledge to run public enterprises successfully.

TransNamib like RCC, Air Namibia has gone through multiple leadership transitions in the last five years alone, often as a result of chief executive officers being dismissed by the board or entire boards being replaced entirely. 

Experts speaking to The Villager have said that the success of state-owned enterprises depends on the capability of its human capital and leadership capability. 

Political analysts Dr Hoze Riruako has said that the failure of public enterprises is due to self-enrichment of the top management and lack of accountability.

“Honestly they will not tell us that they did not see it coming whereby they are running the day to day operations of these entities.

“I would say that most of the time we just turn a blind eye or don’t seem to notice to see when failure is about to hit. We need to assess this type of failure and better prepared as for the future to avoid this,” Riruako said.

Riruako informs that the fall of public enterprises as has been seen this year can be avoided by setting up structures based on good governance as that will be able to guide management to make profits and not create losses.

Sharing his sentiments is an analyst, Ndumba Kamwanya who also said that leadership causes failure at those companies.

“Leadership has to be blamed because they did not align with the vision of the institutions, this such as the RCC and SME Bank. Politics also played a major role in the collapse of these institutions,” he said.

Kamwanya said that some chief executive officers are political appointees who do not possess the knowledge to state owned enterprises.

“When these entities were created there were no fundamentals put in place and terms of how they are going to implement them.

“I think the move that the government has taken up with RCC is a good one and in the right direction, they need to realign so we can see whether it will work or not. I do not think that they should be completely abolished because when you look at the overall aim why they were established, it is a good public policy,” Kamwanya adds.

He said that the state has to invest into the governance of these institutions heavily and that the appointed boards need to be scrutinised as it affects the institutions, as they too many at times are not therefor the interest of the institutions. 

Phanuel Kaapama also pointed the failure of state-owned enterprises away from the government and said that those individuals entrusted to run the institutions have failed.

He said that generally, these failures are not a trend of what has been happening with the State Owned Enterprises because it can be said that they have been doing well.

“For instance NamWater or NamPower with little competition unlike the RCC and SME bank that are in very competitive sector

“The two such as RCC and SME have to do with the management. As in the case of SME bank, they invested in a wrong place and that particular failure only the management can be held responsible for that failure,” Kaapama told The Villager.

He emphasised that company resources are often utilised wrong, and is one of the significant factors that have contributed towards the poor performance.

“Putting up an obvious framework of state-owned enterprises governance is one of the ways we will not see failed government entities. Now that we have Ministry of State-owned Enterprises they should put in a robust governance framework whereby they would include pillars of accountability,” Kaapama stressed. 

Kaapama also said the new ministry has to look into public tenders and procurement practices, saying that “we cannot afford to have a management that was already implicated in some other corruption case to run the public enterprises in my opinion”.