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Public Enterprises record N$1 billion losses annually

Public Enterprises record N$1 billion losses annually

Zorena Jantze

 

THE lack of financial accountability and the regressive state of financial affairs at Public Enterprises (PEs) is an issue that will be tackled by the newly launched Public Enterprise Financial Monitoring System (PE-FMS), which is set to monitor finances in real time to ensure feasible fiscal and political decisions.

 

The PE-FMS, which is funded by German development agency, GIZ, at a total cost of N$900 000, was today launched by the Ministry of Public Enterprises and GIZ.

 

The Financial Monitoring System is a portal through which all PEs are expected to upload their annual financial statements.

 

Speaking at the event, John Steytler, project manager at GIZ, said that PEs are an important part of the Namibian economy as they create employment, amongst others.

 

billion losses financial financial affairs Public Enterprises PEs Enterprise Financial Monitoring System PE-FMS finances feasible fisca political decisions
LAUNCHED: Scene from the launch of the Public Enterprise Financial Monitoring System. Photo: Zorena Jantze

 

“The currently 81 PEs create employment for more than 17,000 people and play, as you all know, a central role in the socio-economic development of the country, for example in the supply of electricity and water or in the provision of telecommunications and transport services,” Steytler said.

 

He stated that a vast majority of these companies, however, operate inefficiently and at a loss, as many PEs are dependent on massive liquidity support from state coffers.

 

“If we look at the facts and figures, we have to state the overdependence of most PEs on the national budget and the systematic deterioration of the fiscal balances. With public debt now standing at an unsustainable level of about 70% of GDP, this calls for a drastic transformation of the PE sector,” he said.

 

Steytler added that the number of loss-making PEs is increasing and PEs become more and more reliant on the National Treasury for financial support and/or bailouts.

 

“If NamPower and MTC are removed from the commercial PE portfolio, the average loss on the portfolio over the past six years is around N$1 billion per annum,” Steytler said.  

 

He added that vast amounts of Namibian Dollars have been spent in support of numerous unsuccessful turnaround plans of PEs over the last 20 years.

 

The German Development Cooperation, in its support of MPE, therefore strives to contribute to improving accountability, and financial performance through the launch of the Financial Monitoring System.  
“As a vital step on the road to the overall, comprehensive performance monitoring of Public Enterprises, which we hope to achieve in the course of the year 2022, the PE Financial Monitoring System has been rolled out to more than 20 PEs during the pilot phase, which commenced last year,” Steytler said.

 

Also speaking at the event, Minister of Public Enterprises, Leon Jooste, said they are exercising governance oversight to 43 None-Commercial Public Enterprises and eight Extra Budgetary Funds.

 

“To put more context to the scope of this responsibility, it is relevant to consider that we are dealing with a total asset base of N$104 billion and N$66.2 billion Commercial Public Enterprises, N$16.8 billion extra Budgetary Funds and N$21 billion Non-Commercial Public Enterprises,” Jooste said.

 

He added that in order to manage such a huge portfolio, the amount and quality of data is paramount.

 

“One of the first things we realised when the ministry was created in 2015 was that very little data was available and that much of the data was old or inaccurate,” Jooste said.

 

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