Minister of Public Enterprises Leon Jooste and the various line ministers still in charge of SOEs face a dilemma. Qualified board members are needed for governance and oversight of commercial SOEs. How do you find and retain them?
Several SOEs fail to fulfil their mandates because their boards do not meet expectations. This happens for various reasons.
Qualified, experienced professionals needed for SOE boards are gainfully employed elsewhere. Understandably, they may hesitate to take on the massive work required to sort out a commercial SOE. They have insufficient time available to work with ailing SOEs and still perform at their high-level primary jobs.
Added to this reality is the fact that working with SOEs could carry stressful political baggage. Clashes with ministers, officials and entitled executive managers can be toxic. These clashes could cast aspersions on hard-earned professional reputations.
Commercial SOEs were created to provide services to fuel the economy. In turn, these companies were supposed to provide products for the Namibian market and generate jobs. They were intended to develop investment potential and grow related industries. They also were created to provide skills expansion and technological developments. This is not happening relative to the massive amount of money spent to maintain these SOEs.
For decades, commercial SOE board appointments were for politically- connected comrades. These directors collected board fees and followed whatever management told them as they had no independent industry knowledge. Many did not add value to their going concerns. This created an entrenched inefficient operating atmosphere.
This has begun to change over the last few years. And yet, there is still a challenge to attract and retain talented experts to wade through the nonsense and take on SOE board duties.
Often boards hit a political wall. There have been many instances of interference from the government. Decisions to cut jobs, hire/fire particular people, or curtail services may draw letters of objection from line ministers. The business viability of the company takes a back seat. This is counter to the obligations of independent directors.
In addition, there is constant public scorn at board fees paid for their technical expertise and valuable time. Board decisions are second-guessed and criticised by those without the same data and details, who think they know better. What seasoned professional in any field would choose to jump these hoops when they do not have to?
In 2017, (then) Information Minister Tjekero Tweya removed businesswoman Ally Angula as a director of the Namibia Post and Telecommunications Holdings (NPTH). This dismissal attracted speculation that Tweya exceeded his powers. Many opined that her removal was related to the scramble amongst the powerful elite for shares in NPTH’s lucrative state assets. The result: an extremely capable board chairman was squeezed out.
The recent resignations of the talented Air Namibia board chairperson, Advocate Dee Sauls-Deckenbrock and Deputy Chair, finance executive Nangula Kauluma further highlight this challenge.
In their resignation letters, each pointed to professional obligations and time concerns as the reason for their resignations. However, before her departure, Sauls-Deckenbrock submitted a request to the government for N$1.6 billion to bail out Air Namibia. As these intelligent executives must have known, such money is not available – there will be no rescue. Their resignations have fuelled commentary that self-preservation decisions were made. They chose to escape into the life boats BEFORE the Titanic hit the iceberg.
We wonder if there was full disclosure about the depth of the misery at Air Namibia before the board members’ acceptance of their posts. Did the scheduled board-approved appointment of a substantive Managing Director of the airline who is white and foreign, go down poorly in powerful quarters?
These kinds of things are disincentives to serve on SOE boards.
The International Monetary Fund (IMF) recently submitted its latest country report on Namibia. Again, the IMF sounded severe alarm bells about the economy. They predict that the 2019/2020 budget deficit will exceed targets unless severe and significant changes are made. Public debt will gradually rise to 56 percent of GDP in the projection period, according to the report. One of those painful changes recommended is to curb loss-making, poorly run SOEs.
Minister Jooste, in a previous interview with the Observer Connect magazine, stated that some SOEs occupy a necessary service provision space. He said that this space in certain industries would not otherwise be filled. The IMF report complains that these SOEs provide their services at higher than necessary costs. They don’t worry too much about insufficient income generation that justifies their existence. Why should they? In the past, the government has always bailed them out, regardless of performance. As there is no more gravy on the train, the SOE crisis has hit the fan.
This newspaper reported last week about the hard-hitting comments of Finance Minister Calle Schlettwein regarding the request by board Chairman Sven Thieme to bail out the ailing nbc. It is not going to happen.
As a result, state-funded television has been visibly curtailed as there is no other financial choice. Some nbc staff members that have demonstrated about remuneration issues in the past are now facing the axe.
We note the current labour unrest at NAMFISA that has its staff protesting for a pay increase in the middle of an economic recession. Placards waved by the disgruntled employees blame their SOE board.
Staff at the failing Agribusdev in Rundu haven’t been paid for two months and they have downed tools. Again, the finger of incompetence points at their SOE board who did not mitigate the situation in time.
Minister Jooste and line ministers have board problems. They are watching experienced and qualified SOE board members give up in frustration or turn down appointment offers. This leaves board slots that must be filled by members who may not have the ideal level of experience and skills. But what else can be done?