SOEs record P485m in losses

Mbongeni Mguni - Lewanika Timothy - Pauline Dikuelo | Monday May 11, 2026 06:00

Whilst established to ensure cost-effective public service delivery or facilitation, SOEs, also known as parastatals, have become significant weights on the budget, losing hundreds of millions of pula each year, after gobbling billions more for their operations.

The latest Auditor General report indicates that the year to March 2023 was no exception. The accumulated deficits of P485.1 million were up from P483.3 million in the prior year.

“The persistence of these deficits indicates continued financial challenges within certain entities and poses a risk to the value of government’s investments,” the Auditor General noted.

The Auditor General’s findings are incomplete because several SOEs, including key strategic entities, failed to submit their books for audit. Some of these entities have spent up to five financial years failing to submit their books for the Auditor General to assess. They include Air Botswana, which has not submitted audited financial statements for two consecutive financial years, including for the year ended March 31, 2023, whilst Botswana Railways has failed to submit audited annual financial statements or management letters since the 2018–2019 financial year.

The Botswana Tourism Organisation has not submitted its annual financial statements and management letters for five consecutive financial years from 2018–2019 to 2022–2023.

'This continued failure constitutes a breach of Section 22(2) of the Botswana Tourism Organisation Act, which requires that the organisation’s accounts be audited within three months after the end of each financial year,' the Auditor General said.

The country has 63 SOEs, which were this year due to receive the bulk of the P16.1 billion set aside for grants and subventions in the 2026–2027 budget. The 16 that are statutorily required to turn in profits largely enjoy operational monopolies in areas such as water, electricity and transport.

Analysts say more worrying than the P485 million in accumulated deficits is the fact that, amongst those that incurred losses in the last financial year, many have been running in the red for years, relying on bailouts from their shareholders, government, or more specifically, taxpayers.

Last August, Vice President Ndaba Gaolathe disclosed that just seven of the 16 SOEs mandated to operate commercially actually turned in profits in the prior financial year. The rest ran losses, which technically means they failed to abide by the laws requiring them to operate as a going concern.

It was revealed that a stunning 31 out of 45 surveyed SOEs were non-compliant with the prevailing codes of corporate governance, while just 19 out of the 63 SOEs had provided the requested responses for a Public Enterprises Evaluation and Privatisation Agency Corporate Governance Framework.

According to the Auditor General, the country’s parastatals owed government P4.2 billion in borrowings as at March 2023, down from P5.6 billion the prior year. While the amount owed to government declined, there remained a risk to taxpayers from the general weak financial performances amongst SOEs.

“The total contingent liabilities highlight the government’s potential exposure if parastatals or public officers fail to meet their obligations, emphasising the need for close monitoring and timely reporting,” the Auditor General noted.

Long-running debts include Botswana Meat Commission (P368m), Air Botswana (P230m), and BotswanaPost (P140m).

“The outstanding balance arose due to the delayed commencement of the repayments, which began in 2022 instead of the originally agreed start date of 2017. “I have not been provided with a satisfactory explanation for the failure to honour the repayment terms of the loan,” the Auditor General said on the Botswana Post debt.

Meanwhile, Alvarez & Marsal, the New York City-based firm that recently handed in the country’s first ever forensic audit to government, came down hard on SOEs, questioning many of their mandates, as well as their financial performances.

The auditors sought an immediate review of the existence of each SOE whilst advocating for stronger oversight on the performance of most of these SOEs.

“SOE turnaround should be treated as a core reform priority. 'Where entities are structurally loss-making or dependent on repeated government support, reform should not only be limited to short-term funding, ” the auditors stated.