The Government has set in motion plans to partially list some of its ailing commercial enterprises by next year, Minister of Finance, Calle Schlettwein, has said.
The partial listing of State enterprises on the Namibian Stock Exchange (NSX) forms part of Government’s plans to push for the companies to start operating profitably and also contribute to public revenues.
Schlettwein, however, told the Windhoek Observer in an interview this week that no decision has been made on which specific companies will be partially listed.
“I don’t think we have specific ones in mind. Of course, there are obvious candidates, but there is no decision taken as yet. There are legal issues that we have to look at. So there is no decision made yet.”
He refused to say which companies are the ‘obvious candidates’ for listing, adding that the possible recapitalisation of the companies before they are listed will depend on their balance sheets.
“I can’t give you a concrete answer. The principle idea behind this is that the State sits with a number of assets, dead assets. They are not generating income, to improve our ability to develop the country. And we must look to improve the performance of these assets and I think the Ministry of Public Enterprise is important to this. They must now inform us, what is in the best interest of the shareholders to do with the assets.”
The minister believes commercial enterprises must be able to make money and be self-sustaining. Cabinet impatience with continuing to bail out underperforming or mismanaged commercial SOEs has been expressed in various resolutions and statements from the Minister of Public Enterprises and the Prime Minister’s Office.
According to budget documents, State owned enterprises were allocated N$6,4 billion in the main budget for the 2016/17 financial year.
The funding was expected to reduce to N$4,6 billion, in the 2017/18 financial year.
In the mid-term budget announced last week, a further N$80 million was allocated to UNAM, NUST, NTA and NSFAF.
Schlettwein said from the treasury’s point of view, it is important that Namibia turn liabilities into assets to supplement tax revenue from other sources like dividends and proceeds from assets.
“I think in the next budget, we want to have the first implementations,” he said.
Commercial public enterprises include Air Namibia, Epangelo Mining, Henties Bay Waterfront, Lüderitz Waterfront, Namcor, Namibia Airports Company, Namibia industrial Development Agency, Namibia Institute of Pathology, Namibia Ports Authority, Namibia Wildlife Resorts, Nampost, NamPower, National Fishing Corporation, Roads Authority, Roads Contractor Company, TransNamib Holdings, Zambezi Waterfront and the National Fishing Corporation.
Apart from the partial listing, some of the measures announced by Schlettwein when he presented his mid-term budget include the harnessing of PPPs with an initial investment of N$2 billion, the establishment of a Venture Capital Fund, a Credit Guarantee Scheme and the setting up of the Infrastructure Fund at the Development Bank of Namibia.
Commenting on the Infrastructure Fund, Eric van Zyl, and Head of Research at IJG said the fund could be a good idea if administered and funded correctly.
“As the Infrastructure Fund will shift some of the big infrastructure projects off Government’s balance sheet, there will need to be a lot of transparency regarding the projects, progress and cost overruns. Without proper transparency there is a much higher chance for misuse of funds within such a vehicle,” van Zyl said.
He added that if the returns are adjusted for Government’s heightened credit risk, then it could be an attractive opportunity.
“However recent cost overruns for infrastructure projects such as for the fuel depot in Walvis Bay and Neckartal Dam will likely result in private investors being weary of investment into the fund. This takes us back to transparency. Private investors will require a risk premium for any investment which is backed by Government due to the recent inability of Government to pay invoices on time.”
Van Zyl said possible PPP’s would be bankable projects such as the electricity generation or the expansion of the Windhoek water reclamation plant. Land servicing and housing would be another, he said.
“There are many such opportunities which provide a return.”