Tuesday, July 5, 2022

We need to review the quality of parastatals’ CEOs

There is little doubt that Botswana Government has over the years spent an arm and a leg on creating the many parastatals that today sprawl and dominate the public sector.

But with the economy now moving to another phase where it has to be private sector driven and also where it is now expected that the same parastatals have to help support the treasury by way of paying dividends to the shareholder, it is important to evaluate whether the kind of people charged with running these parastatals are of good enough quality to meet today’s requirements and challenges.

Of what use are these parastatals as business entities when they cannot help the shareholder when the shareholder is going through a rough patch?

We all remember how, as a shareholder, the Government of Botswana has in one form or another over the years came to the rescue of various parastatals, either in equity injection or outright bailouts.

Among others, these parastatals include Air Botswana, Botswana Development Corporation, Botswana Meat Commission and Botswana Power Corporation to name but a few.

In debating the Budget Speech in the just ended parliament session, Member of Parliament for Tati West, Mbiganyi Tibone made a startling observation.

Though not in exactly those words, Tibone cast serious doubts on the true value of the parastatals to the economy.
Specifically, he doubted if many of them were worth the investments put into them by Government.
Tibone’s observation was ignited by the paltry contribution the parastatals as a whole had contributed to the treasury when called to as per the budget speech presented in February.
We cannot agree with Mr. Tibone more.

While we agree that the true value of these parastatals cannot be measured exclusively by the amount of money they pay to the shareholder, especially because many of them were created for social purposes as a result of the economic conditions that prevailed at the time of their establishment, we want to also hasten to add that if they cannot help the very hand that created them at a time of need, then of what long term value can they really be in today’s prevailing conditions when they are supposed to be run as business entities as the government has so publicly called on them to do.

May be a lot of these commercial pretentions are not only exaggerated but also misplaced afterall.
Our diagnosis of the situation is that the root cause of all problems is the quality of leadership at the helms of many of these parastatals.

We have in the past called for localization of top positions in many of our parastatals.
But in so doing we were not calling for instances where political patronage, political connections and cronyism would replace merit as is the case.

The biggest reason why so many parastatals are not performing is for the simple reason that many of their CEOs have not been chosen on merit.

We regret to observe that in our view a good number of parastatals whose leadership was delocalized seem to be on course to recovery, thanks in no small measure to reforms introduced by those Non-Citizen CEOs.

This week another Member of Parliament, Robert Masitara, complained that Chief Executives of the Parastatals are overpaid.

That may come as a shock to many of the same CEOs who looking by their collective behavior so clearly overstate their true worth. We say given what the shareholder is getting from these Executives, Mr. Masitara is indeed right.

While by international standards the amount of money earned by these CEOs is far below average, it also goes without saying that the quality rendered by the same CEOS, at least as shown by their output, leaves a lot to be desired.

We call on Government, through the line ministries, to closely monitor the parastatals under their authority and insist on targets and clearly stipulated outputs and outcomes.

Some of the CEOs in these government-owned companies are expected to run and manage assets worth billions in Pula, yet when one does a strict due diligence on their delivery, they would be hard pressed to run a small enterprise in the cutthroat environment of the private sector where there is no guarantee of Government coming in with dish loads of money every time there are problems.


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