Corporate governance leads to efficient parastatals

Public Enterprises Evaluation and Privatisation Agency (PEEPA) Board Chairman, Tally Tshekiso said there is a need for corporate governance to ensure that parastatals are run well and efficiently.

In his PEEPA 2015 annual report, Tshekiso said that a performance review of 15 commercial parastatals that was conducted during 2013/14 showed mixed results of performance with some parastatals achieving profitability, while others experienced major operating losses. “It is important to note that Corporate Governance is critical in ensuring that parastatals are run well and efficiently,” said Tshekiso.

According to the report, during the year 2013/14 seven parastatals recorded operating profits with the National Development Bank recording operating losses for the first time in number of years.

The loss was caused by the new banking system that was adopted during the period as well as the impairment of non-performing loans. Botswana Telecommunication Corporation Limited (BTCL) achieved lower results after the separation, which led to the formation of Botswana Fibre Network (BoFiNet).

The report also highlighted that Water Utilities’ (WUC) operating loss increased to P327 million in 2013/14 compared to P141 million in 2012/2013. These losses were mainly attributed to the challenges encountered as a result of the expanded mandate of WUC under the Water Sector Reforms. Air Botswana made an operating loss of P97 million in 2013/14 compared to a loss of P72 million in 2012/13.

Tshekiso said that PEEPA has developed a parastatal performance-monitoring tool aimed at enhancing shareholder Oversight over parastatals. “This tool will facilitate systematic monitoring of and reporting on parastatals performance. To enhance governance and promote good corporate principles, a number of parastatals have developed and adopted board Charters as one of their governance instruments,” said Tshekiso.

He added that a number of parastatals have drafted shareholder compacts and submitted them to their line ministries for finalisation. Furthermore Tshekiso said the implementation of the Public services Outsourcing Programme (PSOP) could not commence in 2014/15 due to budgetary constraints experienced by the procuring entities within ministries.

During the year PEEPA also carried out a review to determine the level at which ministries, government departments and local authorities have engaged the private sector in services approved for outsourcing since the PSOP started and other services that have potential for private sector participation.

A total of 138 contracts of outsourced services worth P761 million were awarded to the private sector during the financial year 2013/14.