Should the right hand cut off the left?

05 July 2019
When reviewing the long-running, ongoing money battles between the two SOEs, Namibia Airports Company (NAC) and Air Namibia, we think there is no better example of the skewed situation existing for public enterprises.
  The right hand, NAC, wants to cut off the left hand (Air Namibia), leaving the Namibian body maimed.  This clash over debts owed between the two, gives credence to those who are against the existence of all parastatals, those habitually deriding Air Namibia and those who clamour for decisive SOE reforms.
We fall into the latter group.  The Ministry of Public Enterprises (MPE) has its work cut out when managing complicated SOE clashes.
For logical observers, what sense does it make for Air Namibia (who clearly does not have the funds to pay over the reported N$522 million debt to NAC) to be publicly threatened with all kinds of debt collection ugliness when any financial respite could only come from their joint cash strapped shareholder? 
In other words, to achieve a better balance sheet for one SOE owned by the government, the other SOE also owned by that same shareholder must be forced into extremis.  Worse, Air Namibia is NAC’s anchor client at all its airports around the country.  Shall NAC destroy Air Namibia and cut off its nose to spite its face? 
If things could get more confused, consider that both SOEs reside under the same line Ministry of Works and Transport and/or the Public Enterprises Ministry (the new PE empowering legislation is only now being enacted).   In essence, the shareholder of both companies owes money to itself and wants to sanction itself to pay itself.  This is strange.
We applaud the talented new NAC chief executive Bissey //Uirab who is technically doing the right thing as the head of his company.  He was hired to whip his SOE into shape on a business basis and he has the skills to do this.  He must collect what is owed from debtors, stop all inefficiencies and increase business opportunities. 
NAC is faced with the reality of needed and expensive upgrades to HK International Airport in order to fulfil infrastructure promises made and to attract new airline clients.  Other airports around Namibia may be smaller, but still must meet international safety standards set for the size and type of aircraft allowed to land there.  Air transport is an important economic development tool. 
All of this takes lots of money.  NAC does not have lots of money and probably cannot borrow any without state guarantees (which will not be given by Treasury).  Its shareholder cannot underwrite the infrastructure modernization and expansion needed (without foreign loans).  
The threat to cancel Air Namibia’s contract with NAC is a joke.  If Air Namibia does not fly, how will that half billion dollar debt ever be paid?  And, the negative ripple effect with the tourism sector and other sectors receiving cargo, investors and clients via Air Namibia will lay an even larger cost on the ailing economy.  In any event, such a punitive action against Air Namibia will never yield N$522 any significant percentage of what is owed. 
We see the amounts owed by one SOE to another as a part of the rising national debt, but one that is shifted to the books of NAC instead of being carried in the national accounts per se. 
If a miracle occurred and government came up with the money to pay off its debt to itself, via Air Namibia payments to NAC, then what?  Shall the NAC stand proudly for photos holding an enlarged cardboard cheque with smiling board members and top management declaring a profit that is being handed back to the government that paid in that money in the first place?

The problem with this pipe dream is that there is no half billion lying around for government to even temporarily pay such an amount to itself.  And, the problem that caused such an enormous accumulated debt would remain unsolved so that in a few years, the same problem would recur.
It is time for the bean counters, the Ministry of Public Enterprises, the boards of both SOEs, top management and the Ministry of Finance to lock themselves in a room and make a once-off deal that should include writing off the fantastic ‘debt’ between Air Namibia and NAC.  This public spat between these two stakeholders in the travel industry scares off the tourists and overseas agents who might want to make bookings and logistics companies who might want to send cargo; it is hurting business every day this situation continues.
Systems to ensure that such unpaid bills never again pile up between Air Namibia and NAC must be enshrined on pain of jail terms and personal financial penalties for violators.  Past boards and executives of both SOEs that allowed this debacle to reach such a crisis level should be named, shamed and banned from being on any other SOE board ever again.
Let us stop the unseemly dance of debt collection from the shareholder on behalf of the same shareholder.  We do not move forward when we run around in circles.  The NAC is here to stay as is Air Namibia (in one form or another).  Government must just bite the bullet and make a plan with this reality in mind so that the country does not have to endure this kind of unsettling impasse again.


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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