21 February 2012

Namibia: Managing Parastatals - Form or Substance


YOU have probably seen the Citizen of Onyanyaa going in for the kill - I mean the kiss when he spotted Angelika Muharukua, Deputy Minister of Gender Equality and Child Welfare, at the official opening of Parliament the other day.

It was in the spirit of the pomp and ceremony of the occasion. It was the form then. I should know. But the form which concerns us here has to do with the management of state-owned enterprises (SOEs) or parastatals.

Prime Minister Nahas Angula was reported to have given "an exclusive" interview to the Namibia Economist newspaper (27 January-02 February 2012). He appears to be overwhelmed by the sheer size (he says they are close to 100) and complexity of the SOEs. He goes on to say that "I believe that at the end of the day, perhaps there must be a ministry responsible for state-owned enterprises. That's the only way we can have uniform policy and also uniform control."

Angula is the ex officio chairman of the State-Owned Enterprises Governing Council (the council) established in terms of the State-Owned Enterprises Act, 2006 (Act No.2 of 2006). The council is a committee of Cabinet. Other glitterati of the council are the ministers of trade and industry and finance, as well as the director general of the National Planning Commission and the Attorney General. Other ministers are only invited to this chamber when matters under their brief are subject of the council's consideration. So what does the council busy itself with?

Their functions are set out under section four of the Act and are very broad, all inclusive and indeed, far reaching. Closely read, this council serves very much like the "super board" of all SOEs. Section 4 (1) reads... "to establish generally accepted common principles of corporate governance and good practice governing SOEs". On the face of it, this should be a sufficient guideline but the Act goes in great detail to spell out that the council, among others, is responsible for the development of common policy frameworks for the operations of all the SOEs. The council is further responsible for monitoring and evaluation of all SOEs; governance agreements between portfolio ministers and boards as well as all manner of performance agreements, remuneration levels of board, CEO and staff generally! If you thought that Orwellian enough, the council is also responsible for the number of board members as well as their term; number of executives, their qualifications and experience. The council's functions are thus so elaborate that it is empowered even to stick its snotty nose into the business of executive management.

It is a turgid piece of legislation, a delightful throwback to the Stalinist past; and a rare monument to bureaucratic hokum. But that seems not to be Prime Minister Angula's beef. He does not realise that his council has all the necessary powers for political (executive) oversight. For now, the Act's principal shortcoming is the wide remit of the council which surely can only hamstrung the boards and executive managements in the exercise of their functions.

What the Prime Minister must share with us is whether he and his colleagues are able to execute their functions as required by this Act which is a sure booby trap for anybody. Do they meet at least four times a year and file reports? And because they are the ones who recommend "suitable candidates" (as per the Act) to the portfolio ministers, what share of the blame does the council take for the failing and incompetent boards the public sector is cursed with? Since the council has prior insight in the financial and business plans of the SOEs, what is their culpability when Telecom blows hundreds of million in Angola or Namcor signs an unfavourable deal with Glencore? Or are they only wise after the fact?

So, our problem may not stem from the fact that we do not christen our political oversight body a ministry. The root of the evil lies elsewhere. Part of the problem lies with the law with overreach. Surely, they must themselves ponder why they should spend their days recommending board members and reading business plans of SOEs. It boggles the mind. They have no role in the appointment of the nomenklatura working in their ministries. Why test and stretch the perceptive skills of the Prime Minister and his merry band?

We need a modern law that demonstrates an understanding of business and our times, with clear division of power and responsibilities between the political oversight, board and executive management. And this is the lesson which Cabinet and this council was supposed to learn from the successful court action by an able board acting in the interest of the shareholder, in the case of Cabinet vs. Road Fund Administration. Read the court order.

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