Govt tightens screw on parastatals
Pauline Dikuelo | Tuesday July 29, 2014 11:13
The shareholder compact articulates clearly the strategic intent of the government to the parastatals including the organisations’ strategic objectives, performance indicators and targets as well as undertakings by the ministry and the board.
Speaking at the signing ceremony with Botswana Communications Regulatory Authority (BOCRA) and the Botswana Postal Services held in Gaborone, the Minister of Transport and Communications Nonofo Molefhi said the shareholder compact would basically focus on the effective monitoring of the parastatals performance expectations.
“As a ministry we have upheld the tenets of good corporate governance by giving you operational autonomy by shifting our control from inputs to outputs,” he said.
Molefhi said the shareholder compact should go a long way in streamlining the operations of the entities and ensuring that inputs are commensurate with output.
He said they intend to sign the same agreement with all the parastatals that fall under his ministry, including the Botswana Fibre networks (BOFINET), Botswana Telecommunications Corporation Limited (BTCL) and Botswana Railways.
The compact comes on the backdrop of a new government new initiative of revamping loss making parastatals, which have been posing a heavy burden on the fiscus.
In 2013, all parastatals incurred losses except Botswana Savings Bank (BSB), BTC and National Development Bank (NDB).
Earlier it was announced that the Public Enterprises Evaluation and Privatisation Agency (PEEPA) was drafting guidelines to be used by Government in overseeing performance of parastatals and monitoring overall implementation. Presenting the 2014/15 Budget in February, Finance Minister Kenneth Matambo said that the oversight responsibility of parastatals would be de-centralised to line ministries while relevant accounting officers will have overall accountability for ensuring that they implement the guidelines, with regular reports submitted to the Productivity Improvement Committee (PIC Force) and Cabinet.
Matambo highlighted that the government would be working on guidelines for the operation and management of existing organisations, which will be done through the implementation of the privatisation policy in order to reduce the burden on the fiscus while some will be merged like the Botswana Postal Services and BSB.
In revisiting the strategic role that parastatals play in economic development, two parastatals, BTC and NDB are already undergoing privatisation. In 2013 The Botswana Power Corporation (BPC) was one of those that recorded a huge loss of P1.652 billion in 2011/12, following a loss of P796.6 million recorded in the previous year, due to operational challenges at Morupule B Power Station. The Botswana Meat Commission also registered a loss of P290.9 million in 2012, following another loss of P233.5 million in 2011.
Looking ahead government says that given the increased budgetary pressures, strict criteria for the creation of new parastatals will be applied, as a measure to contain growth in grant subventions to these organisations.
“In addition, government will continue with its efforts to reform the governance structures of these organisations to give accountability to both their Boards and management with clear performance targets. “All these measures will allow Government, as a shareholder, to contain costs and demand reasonable returns on equity invested in these organisations, as well as in terms of their contributions to economic growth and employment creation,” said Matambo in the budget speech.