A new remuneration structure to be effected beginning of next year will see public enterprises’ employees getting paid according to their performances, Minister of Finance and Public Enterprises Iipumbu Shiimi has announced.
He said the development is one of the measures taken to install high performance among state-owned enterprises, where some have been performing poorly and recording losses, thus forcing the Treasury to chip in for bailout.
“The Ministry of Finance and Public Enterprises is busy developing an integrated performance management system that will be rolled out as from 1 April 2024, starting with commercial public enterprises, thereafter to non-commercial and extra budgetary public enterprises,” he said.
He said for far too long public enterprises including the board of directors have not been complying with the Public Enterprises Governance Act (PEGA), hence taking this drastic action.
He made these remarks at Gross Barmen, Okahandja, where technocrats and key stakeholders are gathered to deliberate on the reforms of PEGA, including the establishment of a public enterprises holding company.
“For too long most public enterprises have been taking PEGA compliance lightly. I have taken the time to study and examine deeply the status of public enterprises in Namibia,” Shiimi said.
“My analysis over the past 17 months, is that there are few public enterprises that are doing well. As expected, there is no secret to what sets them apart from the rest. These public enterprises have solid boards coupled with competent management that are running these businesses sustainably.
“Most importantly, they demonstrate a high level of integrity and strong governance. They are also complying with the relevant laws and regulations. On the other hand, I would say, sadly, a great number of some of our PEs are performing badly and failing to deliver the critical service they were created to perform,” the Minister added.
He pointed out that poor-performing public enterprises are characterised by common challenges such as huge losses, liquidity and solvency, and a high wage bill which averages mostly above 55% of revenue.
Other bottlenecks include, he said, uncontrollable expenditure, noncompliance, including lack of financials, poor performance, poor service delivery, infighting among board members and management as well as unethical conduct and mismanagement.
“We must be frank and talk openly about the poor performance of these entities and must find solutions as a matter of urgency,” Shiimi said
As the team will demonstrate through the public enterprise-Financial Management System, there’s lack of compliance to the governance scorecard which include amongst others, development of ISBP, Annual Business Plan, dividend policy and submission of audited financial statements, which is highly disappointing,” he added.
“Audited financial statements for most public enterprises are behind. We are now developing legal instruments through PEGA regulations to hold PEs accountable.”
In addition, Shiimi said there is a need for talent and leadership development and all public enterprises will be compelled to have a comprehensive strategy and a succession plan for all critical positions.
Another focus area Shiimi stressed is the effectiveness of the boards, in which the policy review should ensure that quality board members with experienced chairs, and other members with key skills such as auditing, legal, HR, IT and industry experience, are appointed.
“Each board is expected from now on to conduct an independent 360-degree board evaluation annually–reappointment to be linked to good performance and the effectiveness, including successful implementation of the KPIs and compliance relevant statutes,” the Minister said.
Namibia has 81 public enterprises.
