RCC milks govt dry

09 March 2018 Author   CHAMWE KAIRA
Budget documents released this week by the Minister of Finance, Calle Schlettwein, have given a glimpse of the high salary bills paid to loss making State-owned Enterprises.
Government spent a total of N$187 million on contingency funds in the 2017/18 budget.
The Roads Contractor Company (RCC), which was placed under judicial management in September received N$21 million for salaries that month as a contingency provision in the 2017/18 budget.
A further N$21 million was paid out in January this year, covering salaries for the first quarter of the year. This means that if the liquidation process is not completed this year, government will spend a further N$63 million (or more) on salaries for workers at an SOE that is not generating sufficient revenues, producing products or meeting a measurable performance standard.   
Minister of Public Enterprises, Leon Jooste announced in September that Cabinet had resolved to place the RCC under judicial management.
Companies are placed under judicial management if there is probability that it could overcome its financial problems.
Another high funding recipient was the NSFAF, which was allocated N$50 million to pay student bursaries that had been committed above its original budget allocation. 
The Ministry of Safety and Security was also given N$25 million in contingency funds for fuel and other utilities.
Government also spent N$12.5 million on the SADC military training called ‘Blue Exercise’, which was held in the Kunene region last year.
The troublesome and often lawless ‘Children of the Liberation Struggle’ benefitted via the youth ministry through an unbudgeted N$18 million to cater for their needs. Namibia, in the midst of a crippling economic recession also gave Cuba N$13 million for humanitarian assistance. 
Other eye-popping unbudgeted payments were N$7,4 million by the Ministry of Justice to Valinsight Pty Ltd as a civil claim for GIPF restructuring.
Another payment was for the Attorney General to pay UK lawyers, Dexter Dias, Richard Reynolds N$1,2 million for the genocide matter.
The labour ministry also requested N$5,8 million to pay Green Enterprises for unidentified ‘services rendered.’
The Office of the Prime Minister was given N$3 million for last year’s Heroes day commemoration.
Other payments included N$752, 699 by the Attorney General as a pension settlement, N$500,000 for Namibia’s participation at the XIX World Festival in Russia in October last year and N$1,1 million for the salaries of teachers at the College of the Arts in Windhoek.
In the budget presented this week, Schlettwein expects to spend N$58,4 billion with a budget deficit of 4,5 percent projected for 2018/19.
Namibia’s total debt as a percentage of GDP now stands at 45,3 percent, way above the government’s own benchmark of 35 percent.
Analysts said this week that government, short on revenue, should sell State-owned companies as another way to raise money without borrowing from financial markets.
Ngoni Bopoto, an analyst at Namibia Equity Brokers, believes that the government must bundle its immovable properties, form a company and list it on the Namibian Stock Exchange.
He also said that government could sell portions of strategic SOEs and return controlling stakes. He cited companies like NamPower and Namwater as strategic companies for national interest, adding that other non-core companies could be sold at market values. 
Bopoto conceded that selling SOEs would be a hot potato with the trade unions because it would mean workers losing their jobs. He said the government would have to negotiate with potential buyers to guarantee that jobs will not be lost.
In general, Bopoto said the budget was what the market had expected, but said the problem has always been its execution. “It was broadly what we expected and it looks good. But, the proof of the pudding is in the eating; it’s about the execution.  Will they be able to execute within the perimeters?
 “Sometimes there are ambitious targets, which are not easy to execute. Last year, we had the issue of unauthorized expenditures; N$3 billion is not a small amount.”
Titus Ndove, the Head of Public Sector and Market Intelligence at Standard Bank said with a infrastructure financing gap of N$29,8 billion and government short of money, it was time that Public Private Partnerships (PPP) were prioritised.
“Namibia, like other African countries, has a huge infrastructure financing gap. We have aging infrastructure, rapid urbanisation and the current investment in infrastructure by the government is too low.” 


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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