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Parastatals’ losses clock billion Pula mark

Publishing Date : 13 May, 2019

Author : KETUMILE RAMATITI

Almost P1 billion of tax payer’s money has been lost by 18 of the biggest state-owned enterprises, among them, Botswana Meat Commission (BMC), which recently made headlines when it nearly closed shop owing to P40 million debt.


The accumulated losses by the quasi-government institutions who are all failing to make profits stands at P742, 187, 254.00, according to Auditor General Report. This is without the other nine parastatals which are yet to submit audited reports to the Auditor General. There are possibilities that the loss could spill over billions. The state-owned BMC which has continued to experience financial challenges and has relied on government bailouts, loan guarantees and grants since years back, is yet to turn profit and is as good as insolvent.


BMC has on top of their deficit received P546 million as loans from government and it is yet to be paid back. However, the accounting officer of the commission has informed the Public Accounts Committee in the past that “a Government decision had been made in February 2018, to convert all loans to the Commission into equity.” 


BMC were audited by Messrs Ernst & Young, Certified Auditors, who were appointed by the Commission board. In the year under review, the Group and the Commission recorded a loss of P238.47 million and P242.15 million before revaluation loss on property, plant and equipment of P220.38 million and P222.28 million, compared to a loss of P222.52 million and P204.05 million, respectively, reported in the previous year.


The commissions’ balance sheet also shows a negative digit as it has current assets of P222.50 million while total current liabilities are P487.90 million, resulting in a net current liabilities position of P265.40 million, while that of the Commission showed current assets of P222.57 million and current liabilities of P543.30 million giving a current liabilities position of P320.73 million.


Most of the BMC debts accrue from overspending on paying for feedlots. “Management highlighted that there were instances beyond the Commission and the feedlotter’s control that sometimes resulted in cattle standing beyond the average time, such as days spent by cattle in sick pens and veterinary issues. Further it has been noted, as in the previous year, a balance of P7.29 million in the Botswana Post clearing account. 


“In response management (BMC) stated that they engaged Botswana Post on several occasions regarding the matter and it was not concluded. The Commission had decided to engage legally to settle the dispute as it was a dispute between the parties,” report highlights.
Other bleeding parastatals include Air Botswana (AB-P42.10 million) and Motor Vehicle Accident Fund (MVA-P126.49 million), Botswana Agriculture Marketing Board (BAMB-P65.36).


Their combined losses top P233.95 million and without much hope of their prospects improving drastically in the near future. The auditors had attributed AB losses to the fact that in the previous years, “management had not performed a formal review (except for motor vehicles) for a number of fully depreciated assets in the assets register to determine whether the assets were in use or needed”.


The auditors noted that the Corporation had not obtained approval from the Minister for tariff changes made during the year under review. “Management indicated that fares were influenced by competition, demand and seasonal promotions which require adjustments to fares to the prevailing conditions which could be as frequent,” says the report. MVA however could not tell the AG as to why they recorded such a deficit but in the past year it made a P260.62 million losses.


FIVE PARASTATALS MAKE P1.5 BILLION PROFIT

Five parastatals however; have made a promising profit of P1, 541,290.00 billion accumulatively. Water Utilities Corporation (WUC P513.46), Botswana Telecommunications Limited (BTCL P217.35 million), Botswana Power Corporation (BPC 67.411 million), Botswana Housing Corporation (BHC P87.75 million) and lastly Botswana Railways (BR P48.62 million).


Despite WUC making the highest profits it could have done more way better in profitability, “the auditors noted that total debtors outstanding for over 90 days amounted to P431.27 million, including Government debtors who made 50 percent of total debtors at year-end.” The auditors also indicated that at the end of the financial year under review, the Corporation was lagging behind on consumer billing, with a number of bills amounting to P37.52 million for 2017/2018 being processed in the financial year 2018/2019. BTC on the other hand while it made profit, it is a decrease from P237.35 million in the previous year.

10 PARASTATALS YET TO SUBMIT AUDITED REPORTS

The AG is lamenting that ten of the parastatals failed to furnish him with the audited finances for revision. NDB which is perennially on the red seeking bail-out loans from government did not submit. In 2016, NDB requested government to inject capital amounting to about P1 billion in the next three years in order to transform the bank and prepare it for commercialisation.  In 2017, it was offered P400 million by government, P100 million of it being a grant while the remaining P300 million was a loan.


Last year, NDB again approached and lobbied the Parliamentary Committee on Public Enterprises and Statutory Bodies to facilitate a process that will see the beleaguered bank being recapitalised to stay afloat en route commercialization. CEDA which has in the past been defrauded millions of pula with the latest being P50 million loans to Samson Moyo Guma’s United Refineries which was never paid back also is on the list. Most of the monies loaned to entrepreneurs have not been paid back, a factor likely to see the Thabo Thamane led organisation also recording millions of deficit.


Other enterprises that are yet to submit the returns are Botswana Savings Bank (BSB), Botswana Tourism Organization (BTO), Botswana Unified Revenue Services (BURS), Civil Aviation Authority Botswana (CAAB), University of Botswana (UB), Public Enterprises Evaluation and Privatization Agency (PEEPA), Vision 2036 Council and Mineral Development Corporation (MDC). Reasons as to why they did not furnish the AG office with the report varied from “failure to have a functional board, others waiting the report from the auditors.”


“I had circularised all statutory bodies and state-owned enterprises requesting them to forward to me copies of their audited financial statements and reports for purposes of review and inclusion of the review results in this report,” AG Pulane Letebele says in his 201 paged reports. With the exception of the Botswana Railways and Air Botswana which are under the ambit of the AG, the rest of the statutory bodies and state-owned enterprises are audited by independent auditors appointed by their Boards of management under the terms of their governing statutes. However, by a long-standing arrangement these entities provide the AG with the audited accounts and reports of their organisations for purposes of review and inclusion of the review results in this report to the National Assembly.

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