Monday, October 18, 2021

The Norilsk settlement – One more reason why Govt must leave business to business

Five hundred and twenty one comma seven million Pula (P521.7 million) is a lot of money by any measure. And the most internationally recognised unit of measure is the United States dollar. So even in dollar terms, we are talking about real money. And this is one of those occasions on which we should not beat up too much who those struggle to pronounce huge figures.

And we should not forget that even the .7 in that figure is a huge sum. It is seven hundred thousand pula. That’s money good enough to build a well-appointed house in Gaborone let alone a rural village where local labour costs are competitive.

Putting aside the .7 million and focusing on the five hundred and twenty one million Pula, you begin to see that that kind of money could be put to good use in many ways.  Ever noticed how dark every other street in the City is? I’m no engineer but I think P521.7 million  is sufficient to  cover the costs of rehabilitating of all  street  lights in Gaborone and  still leave enough change to pave internal roads.  The fact that we still, in this day and age , have dusty roads in many of Gaborone’s residential quarters is well and truly  embarrassing.

But the P521.7 million that I have been ranting  and raving about is the  amount that you and I as  tax payers  have allegedly paid  to Norilsk  in  an out of court settlement. This was reported in this week’s newspaper reports. The bigger danger is that if we hadn’t pay that we would then be staring a P 2.7 billion bill in the face. And for a change I’m happy that we paid Norilsk for two simple reasons. First, it’s the math; P 521.7 million is better than P2.7 billion. Second and in a somewhat bitter-sweet manner   , the payment is further proof -if any is still needed after the spectacular implosion of socialism in 1989 ÔÇô that business is not government’s forte.

So what we are experiencing   here   with the Norilsk pay-out is a harvest of the fruits of economic recklessness laced with bureaucratic stubbornness. For years, advocates of the free markets having been sounding out warnings about the dangers of a government that thinks it can run business.

I know that there are those who think that if only the state could recruit competent managers and boards of governors to run its SOE then somehow these companies would turn out profits. That however is a tempting fallacy. It’s the proverbial burying of one’s head in the sand like the ostrich.

You see, the Botswana government could decide immediately, if it so wished, to recruit highly experienced Harvard or Wharton MBA graduates to run all its SOEs. This talent too would fail because it’s not only about the people. Most of the people who run our SOEs are pretty capable and talented. However there’s an inherent shortcoming; SOE belong to everyone ÔÇô hence we all pay for the Norilsk bill- but in the same breath, belong to no one in particular.  As two million individuals, we have no dog in the fight, as they say. In other words I can’t attend the annual general meeting and therefore have no say in how the company is run.

Even the portfolio Minister can make reckless moves by acquiring Nkomati for example and before you know it he’s either moved to another Ministry or fired. In addition, the Permanent Secretary, Chief Executive Officer, Board Chairman and Minister are not rewarded according to the performance of the SOEs.  We shouldn’t be surprised therefore when they can’t keep up with nimble private competitors.

I have a feeling that we are not seeing the last of these massive out of court settlement if we keep clinging to SOEs.

Therefore the Government should stick to regulation of business and leave the business of business to business.

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