More parastatals tied to performance contracts

Keikantse Lesemela | Tuesday September 16, 2014 15:19

This is in  line with government efforts to overhaul loss making state enterprises, which gobble billions of Pula annually in subventions from the national coffer.

The compact is aimed at aligning performance expectations of the parastatals, which included Botswana Fiber Network (BoFiNet), Botswana Railways, Botswana Telecommunications Limited and Civil Aviation Authority of Botswana (CAAB), for effective monitoring. In July this year, MTC signed similar agreements with two other ministry parastatals, BOCRA and BotswanaPost.

Speaking at the signing ceremony, Minister of Transport and Communications, Nonofo Molefhi said this course of action is aimed at ensuring that public entities operate within their mandate to realise shareholder value and achieve financial independence.

“This agreement commits the director and the shareholder to deliver efficient services according to the mandate. Service excellence should be seen in all our departments,” he said.

Molefhi also said parastatals should leverage on their services in order to remain competitive in the sector. 

“As parastatals we are service providers just like the private sector, so we need to leverage on our services if we are to compete with other private organistations,” he noted.

He also said the agreement would also help to keep track of the organisations. The compact comes hot on the heels of a new government initiative aimed at revamping loss making parastatals, which have posed a heavy burden on the fiscus.

Molefhi explained that the shareholder compact would focus on effective monitoring of the parastatals’ performance expectations. Looking ahead, government says given the increased budgetary pressures, strict criteria will be applied in the creation of new parastatals, as a measure to contain growth in grant subventions.

Earlier this year, Minister of Finance and Development Planning, Kenneth Matambo highlighted that government would be working on guidelines for the operation and management of existing organisations.

This will be done through the implementation of the privatisation policy in order to reduce the burden on the fiscus, while others like the Botswana Postal Services and Botswana Savings Bank, will be merged. Government will continue with its efforts to reform these organisations governance structures, 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.

In the 2013 fiscal year, only a handful of parastatals made profits while the rest were in the red, with the Botswana Power Corporation (BPC) incurring the heaviest losses.

BPC posted a loss of P1.652 billion in 2011/12, following a loss of P796.6 million recorded the previous year, due to operational challenges at Morupule B Power Station.

The Botswana Meat Commission registered a loss of P290.9 million in 2012, following another loss of P233.5 million in 2011.