By Mihe Gaomab II
It was not surprising when Prime Minister Dr Hage Geingob proposed for an establishment of the Ministry of Public Enterprises for the State Owned Enterprise (SOE) Sector to become sustainable and contribute to economic development, citizens welfare and realisation of the Vision 2030 goals.
Economic inclusion, a principle affirmed by Geingob and hence the term “Geingonomics”, describes policies, programmes and interventions targeted at groups of people or places which are not fully able to participate in mainstream economic life either as a consumer, producer or both. It is an age-old policy manifestation in Geingob’s political career of ensuring that his actions have greater impact and is inclusive to all people in Namibia.
Having SOEs under one ministry with a strong political and technical oversight can provide added value on a uniform and cohesive basis a decisive strategic policy direction so that their businesses are aligned with the national growth strategies arising out of NDP4 and Vision 2030.
It is necessary that these SOEs are subjected to a common policy approach and its productive and economic strength are consolidated under one ministry so that their planning and performance, and investments and activities, are in line with government strategic direction with a clear and uniform performance service delivery agreement.
The ministry would further be tasked with improving the delivery and growth of the asset value and investments of SOEs and ensured monitoring and evaluation of their performance and operational efficiencies as well as achieving policy and regulatory clarity in sectors in which the SOEs are operating.
Geingonomics principle offers a convincing case of correcting for the deficiencies of the market through appropriate incentives of the public investment that can aid greatly to long-term development of the Namibian economy. Long-term development requires investments in a range of physical and human capabilities. Public investment programs can increase physical capabilities by investing in capital equipment and physical infrastructure. By reforming and restructuring the current State Owned Enterprise Governance Council (SOEGC) into a Ministry of Public Enterprise (MOPE) can ideally harness the productivity and efficiency of the productive and economic side of the SOEs which can also contribute to alleviating poverty and thus to economic and social development in the long run.
Despite popular perception, encouraged by the business media and contemporary conventional wisdom and rhetoric, SOEs can be efficient and well run. Singapore Airlines, often voted the best airline in the world, is an SOE, 57 percent owned by the government holding company, Temasek Holdings, whose sole shareholder is the Singapore Ministry of Finance. World-class companies like the Brazilian regional jet manufacturer, EMBRAER, the French carmaker Renault, all initially succeeded as SOEs, with the states still exercising critical influence in the case of EMBRAER and Renault.
Geingonomics attests that the reform options of SOEs should centre on greater national productivity and proper corporate governance to the SOEs. On Governance Reform for SOEs, there is maybe a need to argue that the current treatment of SOEs as “one size fits all” needs to be done away with. There would be proposed need to clearly differentiate and classify SOEs according to Economic and Productive Enterprises, Regulatory Enterprises and Service rendering enterprises, thus approaching the SOEs from the respective and differentiated functions they perform in the economy. There is also maybe a need for clarity on owner-agency relationship legal structure, greater accountability and hard budget constraints. This would apply to all SOEs but on a differentiated basis.
There is also a need to reform the finance/investment model of SOEs. SOEs, which are subsidy-driven can use a subsidy-shares swap mechanism where asset management companies are formed where they provide funds to the SOEs where the government owns such asset management companies and ensure proper outsourced financial management on a revolving basis for the SOEs. The Asset Management Companies, which are locally created in turn own shares of the SOEs and ensure prudent financial governance for the SOEs. The need for creating local asset management companies can greatly diversify the local financial market of Namibia, where most of the asset managers are foreign owned, especially from South Africa.
Geingonomics views the public-private partnerships (PPPs) as an important medium to establish effective institutionalised public and private sector cooperation to improve infrastructure investments and enhance public service delivery to the people.
Geingonomics consider that PPPs can ideally assist greatly the success of SOEs through a development finance model — where the Namibian state shares risk and responsibility with the private sector but ultimately retains control of public assets. It is the concerted understanding of Geingonomics that PPPs can have the potential to solve Namibia’s profound infrastructure and service backlogs, in areas of rural electrification and provision of much needed access to power, housing, water and sanitation. PPS can assist to impart technology in telecommunications and assist in broadening logistics and green scheme revolution in Namibia. There are success stories of PPPs in Namibia, like the joint ventures of MTC for example. Geingonomics just need to ensure that PPPs require professional contract drafting, negotiation capacity and monitoring skills.