• June 6th, 2020

Parastatals infighting costing the State: PM

WINDHOEK - Prime Minister Saara Kuugongelwa-Amadhila on Friday bemoaned constant friction within the higher echelons of public enterprises - specifically infighting between CEOs and board directors - saying this takes up valuable time from governance.

“There barely pass a month when we do not read in the media about governance fracases in public enterprises, normally lack of cooperation between boards and executive management,” said Kuugongelwa-Amadhila who was a quest of honour at the annual ministerial address for public enterprises here on Friday.

The meeting was attented by parastatals’ CEOs and board chairpersons.
“The governance framework clearly establishes distinct roles between boards of directors and executive management. It is saddening to witness how in some public enterprises, relations between boards and management are characterised by accusations and counter accusations and indefinite suspensions of CEOs, all of which costs the State and the public,” she added. 

For institutions to be strong, Kuugongelwa-Amadhila said they need effective governance. 
She said when public enterprises are governed poorly, this compromises the ability of the State to deliver services to its people. 

“I wish to use this opportunity to urge management of public enterprises to provide full professional support to their board of directors and the boards to provide leadership to management and staff to support the ministers in order to ensure that the public enterprises live up to the public expectations,” she stresses.

Furthermore, Kuugongelwa-Amadhila says in order to ensure that all SOEs perform to their respective mandates, it is required that each SOE develops its strategic plan, which must clearly outline its contribution to national development goals, namely Harambee Prosperity Plan, National Development Plan and Vision 2030. This alignment, she said allows a harmonised delivery of services. 

“The performance of public enterprises come into spotlight more often. Either by failing to account, or by providing basic social services that are unaffordable,” she said.

“But there are also public enterprises who are models of good performance and innovation,” she added.
“I, therefore, encourage all Public Enterprises to ensure that they fully embrace the performance management system, which epitomises accountability and innovation through effective performance agreements at each level,” she said.

The Prime Minister also raised concern on remuneration costs in public enterprises, saying that there is a need for containment of remuneration costs in the sector to ensure that it doesn’t suppress budget for service delivery because of high administrative costs, especially personnel related costs.

“While appreciating that remuneration is important to attract and retain skills, it is important that the remuneration tiers adopted for all public enterprises are adhered to,” she said. 

She emphasises that, while public enterprises are sometimes capitalised by the State to enable them to have the means to have a strong start off, it is important that public enterprises, especially those that are of commercial nature, strive to manage their affairs on the basis of sound business models, which enables them to be self-sustaining and generate economic and financial returns for the shareholder or the public. 

This means that such public enterprises should have sound business plans and raise their capital effectively and efficiently, so that they do not have to continuously depend of State funding for their activities, she said. 

“The current level of subsidies to public entities are unsustainable and crowd out other important programs that can only be delivered under public service, while also posing a risk for national fiscal sustainability,” she said. She added that the high costs of the services offered by the public enterprises also impose high costs on businesses and erode economic competitiveness and thus economic growth. 
“These are issues that require attention, as do bureaucratic bottlenecks and weak coordination amongst the public enterprises,” says the Prime Minister.

Kuzeeko Tjitemisa
2019-06-17 10:50:28 | 11 months ago

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