18 June 2019

Namibia: Prime Minister Urges SOE's to Be Prudent

Prime minister Saara Kuugongelwa-Amadhila has urged parastatals and government agencies to manage their finances well to cut overreliance on government subsidies.

"Public enterprises should have sound business plans and raise their capital effectively and efficiently so that they do not have to continuously depend on state funding for their activities," she said.

She made this call during the public enterprises ministry's annual address at the Namibia Institute for Public Administration and Management (Nipam) in Windhoek on Friday.

The meeting was attended by board members and chief executive officers of the various state-owned companies.

The prime minister said it was imperative that public enterprises, especially those that are of commercial nature, strive to manage their affairs properly to sustain operations and generate financial returns for the shareholder.

"The current level of subsidies to public entities is unsustainable and crowds out other important programmes that can only be delivered under the public service while also posing a risk for national fiscal sustainability [...] This over-dependence on state subsidies must stop," she said.

Kuugongelwa-Amadhila also raised the issue of remuneration which she said strains the government's service delivery efforts.

Both the central government and public enterprises have high personnel costs and there was need for restraint, she asserted.

"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. [... ]

We need to ensure that we don't suppress budgets for service delivery because of high administration costs, especially personnel related costs," the ex-finance minister said.

She urged SOEs to assist government in combating drought, saying the once-off 2% contribution from workers' salaries is voluntary.

"We hope to get through to your sense of patriotism," she said. The public enterprises deputy executive director, Luisa Shixuameni, concurred with the prime minister on the dependency syndrome at public enterprises.

Public enterprises minister Leon Jooste, who made a presentation at the gathering, also weighed in on the subject.

He believes SOEs and the private sector are key to the country's ongoing economic emancipation battle.

"We are not doing that well and we need to push and fight this battle well," said Jooste.

Of the 73 public enterprises whose remuneration bill is N$8 billion, 22 are commercial public enterprises - employing 11 187 people and 40 are non-commercial entities, with 5 781 employees, Jooste said in his presentation.

Additionally, financial institutions and others employ 496, bringing the total number of people employed in public enterprises to 17 464.

The total assets for all public enterprises are N$97 billion while subsidies from the government stand at N$31billion, he added.

When it comes to compliance of submitting annual reports, Jooste expressed concern that not all SOEs adhere to this obligation.

He said during 2017/18 financial year, only 62% of commercial entities submitted their annual reports, while only 23% of non-commercial entities complied.

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