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Parastatals with overlapping mandates to be merged

Publishing Date : 13 February, 2018

Author : REARABILWE RAMAPHANE

Government has already started a process to rationalize and merge some parastatals with overlapping mandates, Minister of Investment, Trade & Industry (MITI), Vincent Seretse revealed to Parliament on Wednesday.


This is predominantly in the interest of reducing weight from government as the parastatals cost government hundreds of millions of pula. Seretse revealed to parliament that 80% of his ministry’s total recurrent budget allocation goes to funding these parastatals. Stakeholders and economic experts, as well as some politicians have been calling for an extensive review of parastatals and State Owned Enterprises (SOEs).


Seretse was responding to a question asked by Specially Elected Member of Parliament Bogolo Kenewendo. She asked Seretse to state the number of parastatals and government owned companies under his ministry and if there were plans to streamline and merge some. In his response the Minister revealed that MITI housed eight parastatals and three state owned enterprises, making it a total of eleven.


Parliament was made aware that in the 2017/18 financial year MITI channelled over 753 million pula to its nine parastatals which include Citizen Entrepreneurial Agency (CEDA), Botswana Investment and Trade Centre  (BITC) and Local Enterprise Authority (LEA) amongst others compared to P721 563 220 spent in the previous financial year being 2016/17.


Figures indicate that CEDA has been receiving the largest share of this money from the past five financial years. In 2013/14 CEDA received over 340 million pula and in the ending financial year (2017/18) the agency received over 298 million pula.
Further responding to Kenewendo, Minister Seretse underscored that under the context of CEDA which is a financing agency to promote entrepreneurship amongst locals suggestions were already made proposing its merger with Botswana Development Corporation (BDC) and /or National Development Bank (NDB). NDB is under the Ministry of Finance and Economic Development.


For the past five years, BDC has not received any subvention from government and has declared a dividend of over P113 million to government whereas NDB has been making losses and is constantly bailed out by government. Meanwhile Minister Matambo revealed in the 2018 budget speech that across all government ministries, parastatals and state owned enterprises were not doing well.


Matambo said state-owned enterprises (SOEs) exist to support Government’s development efforts adding that their performance was  critical in achieving Government’s broad development objectives of boosting economic growth, promoting economic diversification, and creating employment opportunities.


Matambo conceded the fact that government, like any other shareholder, expects a return on investment in some of these organizations. “It is therefore important that these organizations are held accountable for the public resources entrusted to them by requiring them to provide a certain minimal return on capital, and contribute to economic growth and employment creation,” he said.


Matambo shared that last year,  Botswana Telecommunications Corporation Limited registered  a  net profit of P237.3 million, compared to a net loss of P370.8 million in 2016; Botswana Housing Corporation also performed well  with a net profit of P48.5 million in 2017, compared to P27.9 million in 2016; Botswana Communications Regulatory Authority made a profit of P50.8 million in 2017, compared to P43.6 million in 2016; and Botswana Savings Bank (BSB) made a profit of P15.5 million in 2017, compared to P12.8 million in 2016.


However the perennial loss making State-owned enterprise that has become a cause of national concern is Botswana Meat Commission (BMC) with a net loss of P229.7 million in 2016, compared to a net profit of P332.6 million in 2015. The net profit realized in 2015 was due to a Government cash injection of P600 million.


NDB also recorded a net loss of P168.2 million in 2017, compared to a net loss of P21.2 million in 2016, whereas Botswana Power Corporation registered a net loss of P140.2 million in 2017, compared to a net loss of P99.6 million in 2016. Water Utilities Corporation (WUC) on the other hand, recorded a net loss of P137.6 million in 2017, from a net profit of P119.4 million in 2016, while Air Botswana, improved its performance with a net loss of P12.4 million in 2017, compared to a larger net loss of P86.1 million in 2016.


Minister Matambo said the continued loss making by some state-owned enterprises was a major concern to Government sharing and that in an effort to address this, Government established institutions such as Public Enterprise Evaluation and Privatization Agency (PEEPA) and Botswana Accountancy Oversight Authority (BAOA).


“These institutions are expected to monitor the financial performance and governance of SOEs in meeting their objectives and targets, using information obtained from the audited financial statements and annual reports of such enterprises. Going forward, Government will work closely with PEEPA and BAOA to strengthen the performance monitoring mechanisms for State-Owned Enterprises to ensure that they deliver on their mandates and that the country derives value-for-money from their existence,” he said.


Meanwhile, in his response to the Budget Speech, Leader of Opposition Advocate Duma underscored that the financial crises realised at these parastatals was largely attributed to leadership crises at the same. He said from the level of governing boards, some state owned enterprises boards’ composition was contradictory to business.


“Some of these board members own businesses directly competing with these state companies, how then you expect them to make sound business decisions in the interest of the state companies?” Boko also said the leadership was not credible since some were political appointments made out of merit.

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