Tuesday, October 19, 2021

Now that the Parliamentary Committee on Statutory Bodies has exposed “rot” at our parastatals, what’s next?

The Parliamentary Committee on Statutory Bodies and Public Enterprises has been in session for almost two weeks now. We have to admit that news-wise, it has been easy and fruitful week for journalists who covered this year’s session. That aside we commend the five men committee led by Tati East Member of Parliament ÔÇô Guma Moyo for a well job done. It was only through the tough questions channelled to reporting accounting officers who appeared before the committee that the public now know of the rot at some of the publicly owned enterprises. The biggest worry though is what is the way forward to promote accountability, transparency and investor confidence at these stubborn public entities? 

Judging from the news headlines coming out of the Parliamentary Committee on Statutory Bodies and Public Enterprises session, it seems like a lot of our parastatals are pulling towards a wrong direction when it comes to issues of corporate governance. 

In almost each all of his Budget speeches the Minister responsible for Finance and development planning tend to dedicate a significant chunk of his message to briefing the nation on the state of the state owned parastatals. These include both profit and loss making entities ÔÇô this is a commendable gesture from the minister’s side. The nation also gets the chance to evaluate or read about the performance of our parastatals annually on the Auditor General’s report ÔÇô the report serves as a reliable source of financial standing of our entities and as such a vital public document. 

As it stands atleast two government parastatal which appeared before the Parliamentary Committee on Statutory Bodies and Public Enterprises seems to be rotten ÔÇô atleast when it comes to issues of corporate governance. The two are Air Botswana and the Botswana Tourism Organisation. What is shocking though is that executives from these publicly owned entities are aware of the need and claim commitment to ideals of corporate governance as stipulated by international standards. BTO is almost clocking a year without a board of directors while Air Botswana also operated for close to five months without a board of directors at some point. Executives from both BTO and Air Botswana admitted to have recommended (which is the least thing they can do) to their political masters to appoint substantive board of directors ÔÇô At BTO, which is under the ministry of tourism the advise has fallen in deaf ears. At Air Botswana, although they have a board now, it seems at some point the political master ÔÇô Tshenolo Mabeo decided to become a “board of directors” himself. He reportedly took some trip to Brazil ÔÇô sidelining the current General Manager, who is working on an acting capacity. This should be a source of concern on the public side and a source of shame on Minister Mabeo’s side ÔÇô or whoever sent him. 

Mainly so because it is a rule of best corporate governance practice that the board of directors in public owned enterprise should be always be in place. The issue of why some people would want to micro manage public enterprises despite their political interest is a subject for another day. But we cannot shy away from stating that in our country, there is a history to the problems besieging our parastatals. Membership to the ruling party, rather than expertise has over the years been used to be a defining pre-requisite for appointment to boards of directors. This has invariably killed all prospects of oversight and continues to undermine corporate governance in most of our publicly owned enterprises including but not limited to both Air Botswana and BTO. 

The blame so far should be on politicians who want to micro-manage these public enterprises despite the fact that various ACTs of parliament which established such entities clearly state their role. A decision also to circulate same faces in different boards has over the years contributed largely to poor performance of a number of our parastatals. The truth of the matter is that many of the returns realized by our parastatals are not worth the investments. Take the Botswana Power Corporation and the Water Utilities Corporation as examples. Their key projects, Morupule B and North South Carrier (NSC) ÔÇô are both a waste of tax payer’s money. 

It was not so long ago when the Botswana Development Corporation ÔÇô an investment arm of the government was also involved in this issue of ill-corporate governance ÔÇô if one is to put it that way. Not so long ago BDC liquidated its glass manufacturing plant in Palapye. Given the amount of effort, money and emotions invested in that Plant, the announcement to liquidate must have been one of the most humiliating that Government faced at that time. But all fingers points towards corporate governance and political interference. The BDC Palapye Plant was right from the beginning an investment made in hell. It was ill-conceived, corruptly-wrought with all the known tenets of good corporate governance broken in its wake. 

Given what has come out of the parliamentary committee on statutory and public enterprises session, one is therefore forced to state one of the core values of corporate governance ÔÇô transparency. This aspect of corporate governance requires companies to report information that hitherto would have been the preserve of the privileged few who understand financial and investment terminology. We therefore believe that the parliamentary committee has helped in this regard. Moyo and his committee have helped the media and by extension the public to get answers of questions that we would not ordinarily get. 

But when all is said and done, the #Bottomline remains that accountability; good corporate governance should underline reforms at most of our parastatals. We can no longer afford a situation where publicly owned enterprises parastatals are turned into cash cows and honey-pots for politicians and their close family-friends. 

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