Swim or sink: The new mantra for Parastatals (COMMENT)

The country’s investment and trade promotion agency - Botswana Investment and Trade Centre - last week announced it has generated P3.84 billion from export earnings in the 2021/22 financial year thereby exceeding its target of P3.6 billion.

As noted by the agency’s Chief Executive Officer, Kelotsositse Olebile, this is indeed an exceptional performance that needs to be celebrated by all.

It is also worth noting that in its 10 years of existence, BITC experienced a sharp reduction in government grant income in 2020/21. According to the CEO within this year, the agency’s subvention of P22 million was withheld and they had to survive by their own means.

BITC’s good performance is indeed a positive indication that other parastatals can also contribute meaningfully to economic growth. For many years now, State Owned Enterprises (SOE) have failed on their mandates and only existed on government support and bailout.

We hope pronouncements made by then Finance Minister Dr. Thapelo Matsheka’s that a comprehensive Rationalisation Strategy covering all parastatals is now fully operational.

The strategy was expected to address issues such as duplication of activities and overlapping mandates. Some parastatals have also been identified for privatisation, while others could be closed. This will reduce Government spending on these entities.

Calls to have state-owned enterprises strengthen their internal controls have been made before. In 2019 a report by the Botswana Accountancy Oversight Authority (BAOA) indicated that most parastatals have poor performance with financial statements materially misstated while some of them operate on huge deficits.

Many parastatals continue to post poor financial performances. But with good leadership and a clear mandate as shown by BITC many state-owned enterprises can perform better and contribute to job creation.

State-owned enterprises have been formed to contribute meaningfully to economic growth but by the look of things, some parastatalas are just a heavy burden on the fiscus.

The Government of Botswana created a number of parastatals to carry out specialised services and functions to help grow the country’s economy. These parastatals are funded and owned by the Government and therefore should be compelled to recommit and deliver measurable and tangible results on their respective mandates.

Government should not continue bailing out perennial loss-makers from our scarce tax revenues. As demonstrated by BITC parastatals should either swim or sink!

They have the means to raise a greater portion of their own revenues and should therefore not expect to be funded by the government all the time.