No end in sight for troubled SOEs

Mbongeni Mguni - Lewanika Timothy - Pauline Dikuelo | Monday August 10, 2026 06:00

Since the 1990s when their establishment picked up pace, government has undertaken various efforts to reform parastatals and turn them into efficient vehicles, with little success. These entities’ struggles belie the fact that they enjoy legislation-backed monopolies in key sectors such as electricity, rail, aviation and others.

Parastatals are key to service delivery, and the group of 64 is divided into commercial and non-commercial, meaning those expected to run on a profitable or ‘going concern’ basis and those that, by the nature of their activities, exclusively rely on support from government for sustenance.

Thus, the majority of parastatals such as the Botswana Geoscience Institute and the Botswana Examination Council are not focused on profits but on public service. However, the balance, such as Air Botswana, the Botswana Power Corporation (BPC) and others, are expected to provide government with a return on its annual investment.

By law, these commercial parastatals are expected to operate as ‘going concerns’, generating enough revenue to cover their operations and ordinarily should not require additional capital from government.

In a revealing report earlier this year, the Auditor General confirmed concerns that many 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 indicated that SOEs’ accumulated deficits of P485.1 million in the years to March 2023 were up from P483.3 million in the years to March 2022.

Finance Ministry permanent secretary, Tshokologo Kganetsano, last week told members of the Public Accounts Committee (PAC) that an effort was soon to be announced to kick the SOEs back into shape.

“These are entities that are 100% owned by government and not to pre-empt what will be presented to Parliament, but we went to Cabinet recently with a state-ownership policy for SOEs to try and rationalise SOEs, including the appointment of boards, so that the right boards are appointed,” he said, without giving details.

He added: “Hopefully, this will turn around these SOEs so that they are profitable and not a drain on state coffers.”

The permanent secretary’s comments suggest yet another attempt to clean up the SOE sector. In 2021, the previous administration announced plans for a major shake-up of parastatals, including rationalisation, mergers and disposals, based on efficiencies and modernising of mandates.

Policymakers at the time argued that many SOEs had overlapping or even completely similar mandates and could be merged, while others could be subsumed under others.

The administration left office in October 2024 without any of those plans coming to fruition.

The SOEs have continued down a path of operational weakness despite mounting efforts to turn them around, something which may frustrate government efforts to tighten the spending belt on these entities.

Recent appearances before the PAC provide little to no confidence that these SOEs will turn around anytime soon due to entrenched cultures of poor productivity and governance, as well as a lack of commercial strategies and apparently entrenched cultures of corruption. Most of these parastatals continue to report boardroom brawls, project delays, financial difficulties, as well as operational weakness that they think can be resolved by more bailouts from government.

All these come as government plans to tighten the belt on SOE spending, as fiscal authorities battle to stabilise the country’s embattled financial status.

Parastatals such as Air Botswana continued to operate suboptimally, with executives now revealing that the airline runs a two-flight schedule. This follows requests made by the airline to government to purchase more aircraft, showing a lack of direction and consistency in execution of an operational mandate.

The airline also continues to experience an exodus of pilots who are leaving the country to work for other international airlines, leaving the already embattled airline battling for talent. The Ministry of Transport and Infrastructure earlier this year announced that government was considering partnering with Namibia to establish a joint airline, something which also adds to the strategy fog surrounding the airline.

Between 2021 and 2025, Air Botswana received financial bailouts amounting to P500 million from government.

Appearing before the PAC, Kganetsano revealed that Air Botswana was yet again putting out its hand for more funding, even though it already owes government millions and is reportedly not servicing that debt.

“Air Botswana wrote to their parent ministry and copied us, and we are still waiting for their parent ministry to say ‘they wrote and we ask that you help them’ or the ministry can say they can find a way to help Air Botswana themselves.

“The engagement is not as easy as you think.

“We say to these SOEs that before we can forgive you and lend more, give us solid turnaround strategies so that we know that we can get this money back and that you won’t come back for more.

“That’s an engagement we have with the parent ministries,” he said.

Another entity in the red is the Botswana Housing Corporation (BHC). Despite being profitable for some years, BHC has had corporate management issues and is currently operating without a board while being entrusted with one of the country’s most ambitious housing projects.

In recent months, the entity has seen changes in its top executives after claims that past executives were sleeping on the job. The parastatal has frequented the courts over unfair dismissals of executives, boardroom brawls, and questions over ministerial powers.

Meanwhile, the entity drifted to losses of around P104 million for the year ended March 2025.

Other pain points, such as Botswana Railways, are still trying to get locomotives back on the track, while being passed by opportunities to transport the country’s coal and soda exports to other countries.

Last year, the Minister of Finance, who also doubles up as Vice President, Ndaba Gaolathe, updated Parliament on the financial performance of the entities. He revealed that from over 60 SOEs, only five had maintained profitability for three consecutive financial years

Gaolathe noted that entities such as Botswana Agricultural Marketing Board (BAMB), BotswanaPost and the Okavango Diamond Company (ODC), continued to show financial instability.

Gaolathe said BAMB’s performance has been inconsistent and dependent on successful commercialisation of its strategic goals.

Meanwhile, other entities like BPC, Botswana Meat Commission (BMC), Water Utilities Corporation (WUC) and Botswana Development Corporation (BDC) remained under severe fiscal pressure.

The BMC is one of the entities that owes government hundreds of millions of pula in historical debt and yet has gone again to ask for more. Kganetsano told the PAC that this trend was more common than many would want to believe.

“Some of them (SOEs) have indicated that even going forward they don’t see hope and they want money to resuscitate their businesses,” he said.

“This is like a child coming to you to say ‘I know you borrowed me money, I am sorry, but I need more.’

“That’s the situation and reality on the ground that we are facing.”

Successive Auditor General reports and PAC hearings have repeatedly highlighted weaknesses in procurement, internal controls, contract management and board oversight across different public entities. While not every institution faces the same challenges, recurring findings suggest governance reforms have struggled to keep pace with operational demands.

Every additional bailout, recapitalisation or operational subvention places further pressure on public finances already strained by years of budget deficits and rising public debt. This is occurring at a time when the government is attempting to restore fiscal discipline through expenditure controls,

It has been the argument of some scholars that commercial SOES should be open to private capital injection for equity to improve efficiency and reduce dependence on the treasury.

It remains to be seen whether the latest plan to rationalise SOEs will meet with success. The private sector, meanwhile, is pressuring government to recommit to its privatisation agenda, which would open up more room for a “private sector-led economy” by removing the monopolies many of these SOEs enjoy.

SOEs posted cumulative losses of P485 million in several years to 2023. The government is due to unveil new reforms after years of stalled efforts. The private sector is, meanwhile, waiting for a ‘private sector-led economy’, including the dismantling of some monopolies. MBONGENI MGUNI, TIMOTHY LEWANIKA & PAULINE DIKUELO report