MFDP binds parastatals to performance contracts


The Minister of Finance and Development Planning (MFDP) on Tuesday signed shareholder compacts with seven parastatals under its wings, as government expands the initiative of making public enterprises accountable to outlined performance levels.

Parastatals under the finance ministry include; Public Enterprises Evaluation and Privatisation Agency (PEEPA), Botswana Institute of Chartered Accountants, Botswana Accountancy Oversight Authority, Non-Bank Financial Institutions Regulatory Authority, Public Procurement and Asset Disposal Board, Botswana Unified Revenue Service and Motor Vehicle Accident Fund.

Speaking at the signing ceremony, minister Kenneth Matambo said state-owned enterprises needed to be managed efficiently for them to contribute to economic growth.

“I still believe that the role of state owned enterprises in the development of this country should continue to complement that of the government, given the limited resources at the disposal of government,” he said.

The shareholder compacts is a performance agreement designed to enhance shareholder oversight and governance through an effective relationship between the shareholder and the board of  a parastatal.

It serves to provide overall guidance with regard to oversight of public enterprises.

According to Matambo, the signing resembled a collective commitment of addressing the increased demand by Batswana for better performance and improved service delivery by parastatals and other government agencies.

“The oversight role extends beyond the usual performance monitoring as it also ensures that the strategic intent of the ministry and parastatals are aligned,” he said. Matambo said parastatals were compelled to recommit and deliver measurable and tangible results on their respective mandates.

PEEPA was tasked with overseeing the implementation of the shareholder oversight guidelines and ensured that the compacts were a product of research and were in accordance with normal commercial, legislative and other prescribed norms in corporate governance.

Through the implementation of the privatisation policy, the government would work on guidelines for the operation and management of existing organisations and merge some of them such as the BotswanaPost and Botswana Savings Bank.

The shareholder compact is a result of the 2012 cabinet decision, which approved guidelines for shareholder oversight over parastatals. The objective was to institunalise a set of consistent practices whereby ministries can exercise effective supervision of parastatals and monitor their performance. The compact defines the executive role of government as the shareholder over the board and parastatal and also informs the board of the state’s objectives and expectations with regard to deliverables. The compact comes on the backdrop of government’s new initiative of revamping loss making parastatals, which have been posing a heavy burden on the fiscus. In 2014, all parastatals incurred losses except Botswana Savings Bank, BTC and Botswana Meat Commission, Botswana Communications Regulatory Authority and Botswana Housing Corporation.

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