The Institute for Public Policy Research (IPPR) says the recently introduced hybrid model by the Ministry of Public Enterprises is a step in the right direction towards bringing more accountability in the operations of SOEs.
IPPR Research Associate, Max Weylandt, said the move to centralise oversight over SOEs forms part of a larger global trend, which has brought efficiency in their operations.
“There are many ways in which Namibia can benefit from it, as it is efficient and useful in times of fiscal restraints. In theory the central body can also accumulate expertise and therefore provide better oversight,” Weylandt said on Monday when he presented a research briefing paper on the state of the country’s state owned enterprises.
He, however, warned that the hybrid system will not necessarily translate to better governance in the operations of government owned entities.
“Many SOEs will still fall under line ministries, several of whom have failed at ensuring good governance in the past,” he said.
In terms of exercising its shareholder rights, Weylandt said the State should establish well structured, merit based and transparent board nomination processes.
“The implementation target should also be mandated and disclosed,” he said.
The IPPR Research Associate recommended that laws and regulations be established and that government should ensure a level playing field and fair competition in the market place.
“For this to be achieved, the State should have to follow general laws and regulations,” he said, adding more clarification is still needed on how the new regulations of the parastatals will work.
“Government should clarify how many SOEs it owns, what the nature of its involvement is, and how they are classified under the new law. A law should make the new overall governance rules effective and include clear penalties for non-compliance,” he said.
“The new law should clarify who is ultimately responsible for enforcing governance rules, keeping in mind that line ministries have performed poorly in the past, and the new governance measures should include common accounting standards, including international ones for large and important SOEs. The law should also mandate transparent access to essential information about SOEs.”
According to statistics from the Ministry of Finance, there are currently 98 SOEs registered with the ministry.
In June this year, the Minister of Public Enterprise Leon Jooste announced the creation of a new governance system, the hybrid governance model.
Presenting the new model, the minister argued that it would create more efficient communication and accounting structures.
In Namibia, SOEs have earned a reputation of being mismanaged and being a burden to the fiscus.
Ali Iipinge, the Chief Executive Officer of the Road Fund Administration, who was acting as a respondent during the launch of the IPPR research paper, called on government to provide capital to SOEs so that they are able to fulfill their mandates.
“Without adequate capitalization, these SOEs are set up for total failure” he said.