THE independent oversight of public enterprises is often diffused, and political influence in the oversight mechanism often creates challenges in the effective discharge of this mandate, the chief executive officer of Old Mutual Africa Operations, Johannes !Gawaxab, said on Tuesday.
Speaking during a two-day public financial management workshop in Windhoek, !Gawaxab said very few public enterprises have effective oversight mechanisms, and most public enterprises are insulated from failure.
"Public enterprises are not allowed to go insolvent because Government generally bails them out. If they fail, the option of a takeover bid, which may be viable for private companies, is also out of the question," he said.
!Gawaxab, who is also the chairperson of Namibia Petroleum Corporation, said this means boards and management teams may easily become complacent, adding that the setting of performance indicators and the measuring of performances of public enterprises, including the performance of managements and boards, appear to exist only in law to some extent.
"In practice, performance management is often unclear, uncoordinated, vague and not implemented."
It is an accepted fact that public enterprises require experienced and qualified directors and chief executive officers (CEOs).
Government, as the shareholder, has the right to appoint the boards in terms of the enabling legislation.
"This may create accountability challenges. In the same cases, board appointments are politically motivated, which may adversely impact strategy execution, policymaking and fulfilment of the mandate, given the experience, expertise and qualifications of some board members appointed solely on political grounds," he said.
A board, in accordance with best practice, should be the centre of corporate governance, and it is arguable whether this is always the case for most public enterprises.
!Gawaxab said Government as the owner of public enterprises is entangled in a position of having to play multiple roles.
On one hand, it is a shareholder and concerned with returns on investment and infrastructural development, and on the other hand, Government is also a policymaker, overseeing the implementation of policies.
Government further acts as the regulator, supervising industry practices and protecting the interests of consumers.
"These roles are at times competing and incongruent," said !Gawaxab.
The workshop ends today.