WINDHOEK – Windhoek East Constituency Councillor Ruusa Namuhuja has urged government to cut spending on State-Owned Enterprises (SOEs) and allocate such funds to deserving priorities such as drought mitigation schemes, hospitals, schools and housing.
Namuhuja believes much of the funding to SOEs end up bankrolling flashy lifestyles of executives and board members, instead of helping such institutions to become self-sustainable.
She told her fellow parliamentarians to critically analyse appropriation budgets of non-performing and redundant state-owned enterprises (SOEs) during the current budget debates in the National Council.
It has been reported that one of the reasons some SOEs were unable to produce healthy financial statements is due to the high wage bills they have to carry for redundant employees on their payroll.
Equally, some board members of SOEs and executives do not take responsibility and ownership of consequences for failures at the institutions they lead.
Although parastatals play an important role in national economic development, Namuhuja said they represent the extended arm of government, providing key goods and services to the economy that would otherwise not be served by private enterprise.
They also play an important regulatory role, she observed.
The institutions are set up with state funds which sometimes get misallocated because of lack of timely reporting, monitoring, and scrutiny – and sometimes due to the limited application of basic corporate governance principles.
She proposed that a reasonable portion of these funds be diverted to more deserving priorities such as drought mitigation schemes, hospitals, schools as well as mass housing.
“I reckon that we can no longer afford to continue doing business as usual and squander state funds that are sorely needed for other priorities to sustain the lifestyles of highly-paid executives in these state-owned enterprises,” she remarked.
“I would like to remind all of us that the president of the country [Hage Geingob] had pronounced himself on the importance of the principles of financial accountability and good governance in all our ministries and SOEs,” she reacted.
She singled out that the generous funding that is being allocated to SOEs on yearly basis, with minimal impact to the country’s socio-economic wellbeing, is no longer sustainable.
She reasoned that the financial performance of SOEs has been disappointing in the majority of cases, with government expenditure on parastatals shifting away from the resources from vital capital transfers towards the expenditure on salaries and wages.
Therefore, she said, many SOEs experience high levels of debt as well as declining levels of capital productivity.
“In my opinion, few of our state-owned enterprises make a profit while the rest of them could be characterised as bottomless pits that do not make any substantive return on investment.”
“Our media have reported on the sky-high salaries of board of directors and managers and queried multimillion procurement deals and contracts. This is simply not acceptable and can no longer be tolerated,” she remarked.
Namuhuja said it is high time that the Ministry of Public Enterprises put its act together to address these recurrent shortcomings and numerous complaints directed at SOEs. She also suggested that the relevant ministry should come up with appropriate strategic plans for sustainability and profit-making of these institutions.