The debate that has gone on from the time an apostle of free market economy, Adam Smith coined and preached the concept of “invisible hand” is still prevalent even today. Despite his apparent confidence in the market, Hughes is aware of the debate.
“Those who believe in the model of the free market as the basis for a more dynamic economy argue that governments are currently involved in activities which are inappropriate and that the size and role of government must be cut back drastically,” he acknowledges.
However, “the current debate on the role of government mainly concerns its economic aspects: should it provide the goods and services it does, or should some be handed to the private sector? Should it subsidise or regulate to the extent it does?”
In the ongoing pondering of how long or how far should government play an active role in the provision of goods and/or services, parastatals in the country have come under the spotlight.
Have they abdicated their mandate? The question emanates from a barrage of criticism that has been levelled against some parastatals every year-end when the balance sheet registers losses.
In the early 90s, chief executive officers (CEO) manning the parastatals used to “hide” behind the so-called social focus, arguing that their profits are not measured in monetary terms, nor should they be registered under the profit or loss column of financial statements. Barely a decade has passed and parastatals have been infiltrated by another groom of CEO’s, who are hell bent on tossing champagne every year end when they have made an ‘achievement’.
To them, an achievement is an impressive return on investment - as measured by profit figures at the bottom end of financial statements every other annual year-end. This has brought to the fore the question of who is fooling who? What should be the yardstick used to gauge failure or success?
Head of Public Relations and Marketing Communications at Botswana Telecommunications Corporation (BTC), Modipe Nkwe is unfazed by critics who argue that BTC has lost its grip in-so-far as upholding its mandate is concerned.
“We still have the same relevance BTC was established for,” he said. “Without BTC, telecommunication infrastructure - even mobile phones - would not be working. “The BTC Act outlines the functions of the parastatal as follows:
“The functions of the corporation shall be the provision of all public telecommunications services, both national and international.” Nkwe maintains that BTC has not lost its grip.
“We are a parastatal, established by an Act of Parliament. We do not operate the same way as mobile phone providers. They operate in areas where they know that they will make money. We are a parastatal expanding government’s responsibility,” he said, citing the recently introduced “Nteletsa”, a project financed by government, which provides access to world-class telecommunication services.
The project will see more than 150 villagers and remote area dwellers enjoying telecommunications services. The project is expected to benefit more than 120,000 people in remote areas and villages.
“We have a national responsibility. We are not only after money,” he argues with a measure of certainty. “We are closing the communication gap. Take note that we are connecting rural areas, fa go senang ope teng (we are connected in areas in which we don’t have competitors). We have gone far. We are able to facilitate data and e-mails in remote areas,” he told Mmegi.
Nkwe underscored the fact that though BTC has a responsibility to provide services, the public should take cognisance that they should also make returns to ensure the continued sustainability without subsidies from government.
Critics argue that parastatals such as BTC should be privatised and Nkwe agreed. “It is also government’s intention that in the long-run, BTC will have to be privatised. So if this is a shareholder’s decision, we have to welcome privatisation,” he said.
“BTC is ready for privatisation. We are doing that for the nation.” But is BTC ready for privatisation? “Of course we are,” he said simply adding, “If privatised, BTC will accrue revenue for its own survival and will not depend on government. Privatisation is good as it enables competition. Competition is good as it brings efficiency,” he said.
Asked about the BTC pricing policy, Nkwe said the Botswana Telecommunication Authority (BTA) regulates telephone tariffs. “BTA sets rates,” says Nkwe.
Currently there are tariff in-balances in the telecommunication industry whereby some tariffs are extremely high in certain instances, while others are very low. He revealed that BTC and BTA are planning to balance the tariffs.
The coming of mobile telephone providers (Mascom and Orange) has been viewed as a blessing in disguise. While the introduction of private cellular phone providers meant that BTC has to compete for Botswana’s small telecommunication market, Nkwe says it also helped BTC to be both competitive and efficient.
The liberalisation of the telecommunication sector was initiated by the Telecommunications’ Act of 1996. This Act gave birth to BTA and ended BTC’s monopoly in the provision of telecommunications service provision.
Speaking during the BTA stakeholder’s forum on further liberalisation policy, early this year, BTA CEO, Moses Lekaukau told participants at Gaborone International Conference Centre that liberalisation of telecommunications enabled BTC to be more efficient, a view shared by Nkwe.
Nkwe agrees that both privatisation and liberalisation are desirable as they bring challenges to the telecommunications market. “Further liberalisation will help us. We will be able to make money if other telephone providers will give us competition. “We are doing exactly what the Act requires of us,” he said.
“We haven’t strayed from our mandate. We are doing what the Building Societies’ Act expects us to do, but we are not really a parastatal,” public relations and communications manager at Botswana Buildings Societies, Sipho Showa revealed.
“The situation here is a bit dicey, we are not a parastatal per se, this is because parastatals are established by an Act of Parliament and we don’t have a BBS Act as is the case with other parastatals. Government comes in as a legal member with 32 percent shares at BBS, while other shareholders hold the remaining 68 percent,” he said.
But BBS performs just like a parastatal as required by the Building Societies’ Act of 1961. The Act empowers BBS to - acquire or retain the ownership of land or the lease of land and to erect buildings thereon primarily required by the society’s affairs; to borrow money at interests other than in the form of deposits; to hold cash and make deposits with the bank approved by the Registrar; to lend money to BBS members and others in the security of their deposits.
“We are doing all these so we are still relevant,” emphasised Showa. To improve customer service, of late BBS has undergone a re-branding exercise that saw an improvement in its banking facilities, in terms of its general appearance. The Society went an extra mile by introducing Automated Teller Machines (ATMs) at BBS branches nationwide. “We need to ensure that our customers are treated to our satisfaction.”
Prevalent and fierce competition from commercial banks has not been viewed as a threat by the BBS. “We have our mandate and we always stick to it,” explains Showa cheerfully. “All service providers are expected to keep their pulse on customers. Today customers need good service, this is everyone’s challenge,” said Showa who appears to be unfazed by sophisticated services offered by other luxurious commercial banks. “We have a responsibility and we will always stick to it,” he said.
“The mandate for Water Utilities Corporation (WUC) is to plan for and provide potable water to the corporation’s urban areas,” says public relations officer at WUC, Masegonyana Madisa.
He acknowledges the increasing demand for water. “So far WUC has been able to meet daily water requirements in all of its operational areas,” said Madisa. He explained that in order to ensure that WUC keeps water flowing for Batswana, the corporation carried out a 10-year Master Plan for its operational areas, where extensive planning for water supply is done.
Information reaching Mmegi indicates that in 1999, WUC completed major infrastructures under the Gaborone and Lobatse Water Master Plans. WUC has also embarked on the Francistown Master Plan, which should be completed by 2007, said Madisa adding that design on the Selebi-Phikwe Master Plan is underway and is expected to be complete around 2007-08.
Madisa told Mmegi that WUC has a drought strategy in place. “The strategy provides measures to alleviate drought,” he said. Madisa maintains that WUC still upholds its mandate as the WUC Act of 1978 (Amendment) stipulates. Madisa said WUC has been able to meet demands in all urban areas and peri-urban areas. “WUC has been instrumental in major development areas, which contributed immensely to national economic growth and social uplifment,” Madisa said. Botswana has one of the highest tariffs of water in the region. Madisa acknowledged this adding that there are various reasons to that. “First and foremost, the scarcity of water coupled with development of water resources in Botswana makes the supply of water become a costly business. Government has maintained a policy of full-recovery,” explained Madisa.
Botswana’s infant water infrastructure that has been developed at high costs resulted in a high cost of water for consumers. The North-South Water Project has led to the high cost of water tariffs. High costs of dam construction have made water tariffs rise. “In 1993, WUC forked out over P800 million towards the construction of Bokaa Dam,” he said.
But it is yet to be seen whether parastatals are upholding their mandate. For an early clue whether they have stuck to their mandate or not, it was surprising that Botswana Housing Corporation (BHC) had not responded to a questionnaire sent by Mmegi three weeks ago.
Analysing the debate, development administration and public sector reform lecturer at the University of Botswana (UB), Adam Mfundisi said like any other public enterprise, parastatals have been created to serve a purpose.
The biggest confusion surrounding their mandate is that some of the “objectives are overt while others are covert. That is why there seems to be a problem in understanding their direction,” said Mfundisi. He said when making judgement on the performance of these quasi-government departments, majority of people tend to concentrate a lot on the overt and judge the covert at the same scale. It is the concealed mandate that clouds the judgement of performance in parastatals. Even though he would not point a finger at a specific organisation in the country created to disguise, he said it is these overt objectives that are susceptible to questionable performances.
“Sometimes their objectives are camouflaged. What you see in mission statements and visions is not what you will get, it is a public relations exercise,” he explained. But then why?
“It is for purposes of political patronage - to make openings for political loyalists. It is difficult to pay loyalty in pure bureaucracy because of stringent recruitment and selection processes, hence making some covert organisations,” he analysed.
Some of the parastatals created for different motives, he said, would be based on political considerations “and when it comes to measuring performance, it becomes difficult because we will merely be measuring primary objectives that are written”. He said where political patronage is part of the equation, poor corporate governance, nepotism and corruption becomes like a plague.
He also said such parastatals usually fail to attract and retain qualified staff and there is redundancy due to overstaffing. Mfundisi is of the view that there are still theoretical and practical reasons for keeping public enterprises.
“There is still a need for government intervention,” he stressed. He pointed out that Botswana is still a small market and attracting multiple entry of firms into the country is an impossible dream.
“We will end up with private monopolies and consequently it would be seriously damaging,” he explained. Defending government’s intervention in the running of the economy, he said ownership is not necessarily a function of poor showing.
“If we have a problem regarding management or legal framework, let us just correct that.”
He said the infrastructural network that traverses the breadth and width of the country is a result of public enterprises “but we have also had poor performance as well”. Mfundisi emphasised the need for co-existence of the public and private sectors.
He brushed aside the idea of a market regulating itself, saying the country is likely to be sold to foreigners. For purposes of security and economic sustainability, he argued that the presence of government is of paramount importance.
On why public enterprises are in a rush, to amass maximum profits, Mfundisi said parastatals are also joining the impetus of organisational development, in a bid to address macro-economic crisis.
“Third world economies are excited by the performance of the private sector and now want to implore some of the private sector techniques and methodology for efficiency and distribution of resources”.
“There is also a myth that the private sector is more efficient - the catch word nowadays is adding value,” he said.
He explained that the current excess dominance of the government in the economy is a result of colonial legacy. The colonialists had done little development and it is up to the current governments to see to it that they fill the development gap.
“Even in countries such as Zimbabwe and South Africa where colonialists left significant developments, you still find that it was only confined to urban and per-urban centres,” he noted. He further noted that at independence, the private sector was almost non-existent, with low levels of resources - both human and financial.
