Time for paradigm shift on public enterprises
Dithapelo Keorapetse | Friday April 8, 2016 14:54
These PEs are synonymous with scandals. The country has lost billions of Pula in fraudulent procurements in these PEs. What is disheartening is the growing non-accountability of PE bosses and Ministers when things go fundamentally wrong. Many Batswana wonder what is wrong with their PEs.
Like many African countries, Botswana’s economy at independence was not really active. The country was poor and in addition to high poverty levels, unemployment and lack of access to services, there was no private sector to rely on for diversification of the economy and provision of some services. There were no commercial banks, no industries, no transport companies or any entity providing utilities. There were very few PEs at independence namely Botswana Meat Commission (BMC) and Botswana Savings Bank (BSB) inter alia. It is for this reason that parastatals, including those which are enterprises were formed. Since independence, and especially in the 1970s to 1980s, there has been a proliferation of parastatals with distinct mandates. The main reason for the mushrooming of parastatals was state intervention in economic development-a developmental state model that Botswana pursued after discovery of diamonds and other mineral deposits in recoverable quantities.
Almost every sector of the economy has its parastatal; for instance agriculture, finance, transport, communication, education and others. Almost all parastatals are established by Acts of Parliament and are run by boards appointed by ministers and have subventions from the government. Part of the reason why Botswana’s economy started to function was parastatals which were established from the mineral-generated revenue. The state has, until recently, not been keen to privatise parastatals especially PEs.
Whilst the role of parastatals has to be acknowledged in terms of their part in transforming the country’s economy, their performance and loss-making, especially of PEs, should be seriously scrutinised with a view to reform the entire model. In November 1992, the Christie Commission, appointed by the President found ‘gross mismanagement and dishonesty’ in the Botswana Housing Corporation (BHC) ‘resulting in the loss of tens of millions of Pula’. In 1993 the government bank, National Development Bank, was almost bankrupt as a result of poor rates of loan repayment. The leading debtors, it was said, were the President, his brother, and senior officials including Ministers.
In the recent past, private companies, former executives of PEs, senior government officials and Ministers were charged with various offenses of corruption relating to their roles in PEs. In all the cases, charges were either dropped or the courts discharged and acquitted the accused. The cases, including allegations, related to Debswana, Public Procurement and Assets Disposal Board (PPADB), BHC, BMC, Botswana Development Corporation and many others. PEs are entangled in big scandals.
All the scandals involving PEs have cost the public a lot of money. The failed Morupule B, Glass Manufacturing Project and BMC financial crisis etcetera have made the taxpayer pay through his/her nose. Currently the country is faced with yet another scandal involving a PE-Botswana Railways. A supposedly new passenger train can’t move due to technical problems.
Parliament should review the model of PEs. They are run politically; their boards and senior executive are appointed to positions by politicians. In many instances, the day-to-day running is determined by politicians; they decide on main procurements and major decisions. Permanent Secretaries and senior government officials, CEOs and other senior executives of parastatals run parastatals as board members. Political consideration takes precedence on major decisions including who serves in the board or as CEO.
The model of running PEs in Botswana is not only obsolete, but it fails basic standards of corporate governance. They will continue to perform poorly, not making profit and being embroiled in scandals of corruption and mismanagement.
The government is trying through privatisation to somewhat remedy the situation. There are problems however, on this front. The policy doesn’t guarantee efficiency and effectiveness and may in fact enrich a few to the detriment of the general populace.
There may be a need to have a ministry responsible for all PEs and domestication of international corporate governance standards into laws to ensure their efficiency and effectiveness. Parliamentary committees on PEs should be enhanced so that the institution as a whole provides effective oversight on these enterprises.