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Strategic value of public enterprises must be enhanced

Strategic value of public enterprises must be enhanced

Niël Terblanché

UNLEASHING the potential of public enterprises through performance monitoring and implementing international best practice methods must be done to stop the dependence of such entities funding from state coffers for mere survival.
Leon Jooste, the Minister of Public Enterprises while officially opening the two-day Public Enterprises Conference, which is aimed at finding ways to implement the best possible Performance Management System (PMS) among all the Public Enterprises in Namibia within the country’s legal framework, said inappropriate governance and not equipping line ministries with specialised skills to perform the functions as professional shareholders have led to failure of certain state owned companies.
Jooste said the main focus of the conference is on performance management and in this regard decided to include several private sector speakers in the program to hear how they are approaching performance management within their businesses.

Pictured: Minister of Public Enterprises, Leon Jooste. – Photo: Contributed

Dr. Quinton van Rooyen, the Group Managing Director of Trustco Group Holdings will be amongst the private sector speakers at the conference. Amongst the foreign government speakers will be the South African public enterprises minister Pravin Gordhan.
“Our two countries face very specific, unique challenges due to our intertwined turbulent history and the role that Public Enterprises play to overcome many of these challenges are immense,” Jooste said.
Jooste said public enterprises they have become an unbearable financial burden because of their dependence on annual government subsidies and guarantees to sustain operations. In this regard public enterprises during the 2018/19 financial year received more than N$4 billion from the national budget.
“Even more concerning is the fact that commercial public enterprise entities that are supposed to be profitable, received N$1, 4 billion,” Jooste said.
The minister indicated that the total wage bill for the 17 464 public enterprise employees has reached a total of N$8, 5 billion per annum which represents 28 percent of the total public enterprise expenditure of N$30 billion. The number is well above the average of 27 percent of other African countries and of great concern to the ministry.
He said despite these shortcomings, the profitability of commercial entities improved from N$840 million to N$1, 9 billion from 2016/17 to 2018/19 while that of the financial institutions and extra-budgetary funds improved from N$633 million to N$760 million over the same period.
“The Ministry of Public Enterprises was not created to maintain the status quo, it was created to bring about reform and transformation to change things for the better. The Hybrid Governance Model was approved by Cabinet in 2016 and this year saw the promulgation of the Public Enterprises Governance Act, Act number 1 of 2019. Our aim is to change manage a complete mind shift where the corporate DNA of our Public Enterprises are transformed into a performance orientated culture.”
To achieve this ministry need new and bankable Integrated Strategic Business Plans (ISBP) to be approved, Performance Agreements between Board members and the Minister and the Board and the Chief Executive Officer with Key Performance Indicators aligned to the new ISBP’s, incentivized remuneration, performance management systems within the Public Enterprises and consistent Performance evaluation by the Ministry to work in sequence.
Besides the top management of all the Namibian public enterprises the conference also brought together delegates from South Africa, Botswana, Sweden, New Zealand and Kenya.

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