On the occasion of the SOE CEOs forum event held at the beginning of June 2021, the state-owned enterprises minister made a statement on the state of compliance pertaining to these enterprises.
The minister stated that only 42% of commercial and a non-specified percentage of non-commercial public enterprises in Namibia comply with corporate governance for public enterprises.
The SOEs minister mentioned that of 24 SOEs, which are classified as commercial, nine have governance and performance agreements, 10 commercial SOEs have the latest annual reports and 11 have approved five years integrated strategic business plans (ISBPs) in place. What the minister failed to divulge was, whether the performance agreement was with the board in general or performance agreements with the board members individually.
SOEs classified as non-commercial are 42 in total; 17 have performance and governance agreements, 10 have the latest annual reports and only six have approved five year ISBPs.
There is 13 commercial, and 32 non-commercial SOEs, which are comfortably operating without five year plans. A combined 45 public enterprises do not have their five years ISBPs. The question is, how are these enterprises run? The board is required by the Corporate Governance Act 1 of 2019 to submit the integrated business plan to the minister of public enterprise if it is a commercial enterprise or to submit it to the relevant or appropriate minister if it is a non-commercial enterprise.
If the enterprise has failed to submit its integrated strategic business plan, it also means that the enterprise cannot have its annual business and financial plan approved, because it is supposed to be taken from the integrated strategic business plan. Their annual budget has no ground and, therefore, cannot be approved because it lacks substance, which is described in the five year ISBPs.
Almost, all our commercial and non-commercial public enterprises have boards and top executive leaders. These individuals were hired in these positions because the Ministry of Public Enterprises and the line ministers believe that they are the best candidates for those positions, yet these leaders are failing us the people of Namibia, the government of Namibia and the ministries that appointed them in those positions.
It is sad to know that only 16 SOEs have operational plans and 35 SOEs do not have operational plans.
The challenges faced by the majority of SOEs is poor fiduciary oversight and operational plans.
The criteria used to appoint these board members are not publicly known, because the ministers have the power and prerogative to appoint anyone that they believe have the ability to perform in that position. Some board members are interviewed before being considered for these positions; some are tested through psychometric tests. Is the psychometric test overrated and redundant, because it cannot deliver the people that are needed to run the SOEs in Namibia?
After the Ministry of Public Enterprises was formed, the positions of board members used to be widely advertised; however, that has changed over time. For some time now, the ministers have been appointing and recycling board members, whom they have in their database/network. Most of these board members are appointed and moved from one state enterprise to the next. If these board members who are recycled between the public enterprises were performers, we would not have a high rate of non-compliance public enterprises. The ministers have for reasons only known to them turned a blind eye on the SOEs non-compliance sickness.
We the public, unfortunately, have no power or input as to which individuals are appointed on which board because, the system is supposed to have competent people who would appoint competent board members to run those organisations competently, by ensuring that, the integrated strategic business plans and other fiduciary duties of all the state-owned enterprises are up-to-date, and are approved.
I am hoping that one day we will get the answer.
Why nothing is done against the non-compliant public enterprises? These board members have their tea, cookies and juice and mineral water and board sitting allowances and gadgets, and act important but they are not assets to those enterprises.
Equally, the top executives at those organisations seem to be busy but they have no plan from which they are operating. They have no five-year plans, meaning they have no annual operational plans and financial plans. That is why they can impulsively spend money because those public enterprises simply do not have any plans, and the boards and the top organisational leaders cannot be held accountable, very sad indeed.
Who is responsible for ensuring that the integrated strategic business plans, annual business plans, financial plans, and other requirements are met, and documents are submitted to the offices where they are supposed to be submitted?
The non-compliant enterprises themselves have a big role to play in this failure, and they should be reprimanded. The ministers should get out of their honeymoon as well and get to work and get some board members and executives to answer questions.
They should be shown the door because they cannot perform their duties and the ministers or ministries should stop recycling board members and begin to appoint board members based on performance.
Non-performance in Namibia is legendary. You find one board member serving on more than five boards. Most board members are public servants, and that should be reviewed and changed. We are complaining of slow services in public enterprises, the ministers are overloading these individuals with board responsibilities at more than two public enterprises and these people have their jobs, family, some are studying and have other responsibilities, which result in non-compliance.
Only a few people would say no to serve on a board, because of their organisational loads. If an organisation does not have annual financials for the past five years and the board and the top executives still have jobs, this only means those who are supposed to ensure that the public enterprises are compliant are overworked and cannot attend to some of those basic tasks.
The ministry of public enterprises can consider a commissioner, which can ensure that the non-compliant are fined and dealt with. Those responsible will not be allowed to serve on boards or work for any public enterprises for the next five years.
Punishment and rewards in public enterprises should be clear, so that when a person is appointed as a board member or as a top executive for a public enterprise, they know that the penalty of non-compliance and non-performance is severe.
The board members and top executives serving at non-compliant public enterprises should do themselves a favour, either they comply or leave the organisations so that those who are able to restructure and turn these organisations around to become compliant are appointed. They will most probably not leave on their own accords due to good salaries, benefits and board sitting allowances.
As new board members and executives are appointed, consider their abilities carefully, in terms of their technical skills, soft skills, leadership skills and leadership styles; very critical.
* Rauna Shipena is a doctor of management graduate from Colorado Technical University in the USA. Her doctoral degree concentration is in executive leadership. She can be contacted at: email@example.com.