‘Govt has not been a good shareholder’

State-owned enterprises (SOEs) have failed because the government as the policy maker, owner and regulator has not appointed competent boards and has approved infeasible business plans, Public Enterprises Minister Leon Jooste has said.

Speaking at a breakfast meeting on the state of the local economy hosted by the Economic Association of Namibia (EAN) on Wednesday, Jooste said the government – the majority shareholder in SOEs - has not been a good shareholder.

“We’ve not managed to be a professional shareholder for our public enterprises. That’s why our president created this ministry and that is our focus,” he said.

To back these claims, he said: “It is the shareholder that appoints the board … the shareholder who approves the turnaround strategies … the shareholder who must ensure that there is accountability, transparency [and that] corporate governance principles are adhered to.”

Jooste said the government’s failure has resulted in what he termed an “SOE culture”.

“The SOE culture is typically what you would see from many of the commercial entities. The bail-out culture,” he said.

To address these past shortcomings, Jooste said his ministry has now started to challenge business plans of SOEs which are not feasible.

“In the past, business plans were approved without being evaluated by a professional body, so they were doomed to from the beginning,” he noted.

Air Nam

He pointed to cash-stripped Air Namibia as a classic example of a wrongly approved business plan.

“If we look at their previous business plan, the business plan was not something the shareholder should probably have approved. And the shareholder [government] has not told Air Namibia what its expectations are,” he explained.

However, Jooste said: “From information and data we’ve gathered and tested, we know that Air Namibia can break even in a maximum of three years or even less.”

The minister added that the government is transforming from what was “a very passive shareholder to a professional active shareholder.”

He further acknowledged that a performance culture is non-existent in most parastatals, hence the need for incentivised remuneration and the evaluation of business plans.

Integrity and improved transparency are key in running parastatals, he added.

“Secrecy breeds corruption at all times, so we should not have anything to hide,” he said.

Earlier this year, Jooste lamented that he was “severely confined” confined by the current legislation governing public enterprises in Namibia.

The proposed new State-Owned Enterprises Governance Act has been approved by Cabinet and will be tabled in Parliament during this month.

If passed into law, the act will give Jooste’s ministry the necessary powers to govern SOEs. - Nampa