Soes bleed the economy deeply – Dr. Matsheka
n his inaugural budget speech, the Minister of Finance and Economic Development singled out Botswana Meat Commission (BMC), Botswana Railways (BR), Air Botswana (AB) and the National Development Bank for what most Batswana would agree is a fitting description as “dead horses”. The nation will thus be waiting to see what a special committee that Dr Thapelo Matsheka chairs will do with the animals because flogging a dead horse could never bring it back to life.
Despite complaints by Batswana that State-Owned Enterprises (SOEs) or parastatals are a costly failure, they continue to gobble up the budget.Parastatals are wholly funded by government through subventions but most of the high profile ones have failed to sustain their operations and have routinely fallen back on government for support in the form of supplementary budgets over the years.
Botswana has over 60 parastatals, many of which are unknown while some have been criticised for sharing mandates. These loss-making entities have a decorated history of maladministration and in instances, reported cases of corruption.In quest of restoring public trust in them and rescuing Botswana’s zombie economy, the new Minister of Finance and Economic Development, Dr Thapelo Matsheka, who is hailed as an economic scholar of note, has to put his brains to the test in what may be described as his first real test of character. Matsheka has noted that there is need revisit the roles played by these entities.
In his maiden budget speech recently, the former economics lecturer at the University of Botswana (UB), Matsheka, had this to say about SOEs: “State-Owned Enterprises (SOEs), or parastatal organisations, as they commonly are referred to in this country, are part of government’s delivery system. As such, they are very critical to the transformation agenda. There are currently over 60 SOEs in the country, ranging from regulatory through academic to commercial ones.”
Matsheka triggered a lot of interest when he spoke of a need to relook into these entities. “To transform this country, the role of these SOEs will have to be revisited in order to align them to the transformation agenda.” The man who hails from Lobatse said when parastatals were established, government held the view that its developmental goals would be achieved “much more efficiently through the alternative delivery model of parastatal, instead of the public service”, he said. However, he acknowledged the ineptitude of these organisations. “The performance of some of these organisations indicates that either this original assumption was wrong or there has been some creep in their mandates over time,” he queried.
“Whatever the case may be, there is need to revisit most of the mandates and founding statutes of these organisations to address the governance and performance of some of them, and more importantly, align them to the transformation agenda.”In the wake of this, Minister Matsheka referenced a sub-committee of Cabinet, which he chairs, to review parastatals and carefully scrutinise their “mandates, governance and performance”. The finance minister singled out Botswana Telecommunications Corporation Limited (BTCL), Water Utilities Corporation (WUC) and the Botswana Power Corporation as positive performers, although they too continue to rely on government for subventions.
In the more than 60 SOEs that exist, the list of “dead horses” in the minister’s view include Botswana Meat Commission (BMC), Botswana Railways (BR), Air Botswana (AB), and the National Development Bank among other dismal performers. “On the other hand, some parastatal organisations continued to register losses in 2018/2019, which included Air Botswana (AB), Botswana Meat Commission (BMC), National Development Bank (NDB) and Botswana Railways (BR),” Dr Matsheka said. “You will notice that the performance is narrowly focused on financial performance, even when these organisations have not achieved or met the delivery of projects for transformation and high income status.”
A case in point of parastatal failure is perhaps Air Botswana, which owes government P235million that it used to purchase an Embraer jet. Over and above this, Air Botswana’s 2019 financials are yet to be released, owing to a change in the corporation’s external auditors. The national passenger carrier has struggled to make ends meet, despite acquiring more fleet. Late last year, its management announced that they would be retrenching over 200 employees in ongoing restructuring.
The irony with some of the SOEs is that they divert from their mandates immediately they are formed. The Botswana Energy Regulatory Authority (BERA) was established by the BERA Act of 2016 and started operations in September of 2017. Hardly three years into existence, the organisation was mired in allegations of corruption and abuse of office by management. In 2019, the then minerals minister Eric Molale resolved to suspend the BERA board over poor performance and misconduct.
As a part of tackling BMC decay, government announced that in April last year that a management company would be engaged to try to resuscitate the insolvent business. This would apply to NDB. Regarding duplicating mandates, there is hardly a difference between what Botswana Innovation Hub and Botswana Institute for Technology Research and Innovation (BITRI) do. Both institutions have been tasked with spearheading research-based innovation and businesses towards Botswana’s envisaged knowledge-based economy.
In its website BITRI states: “The Botswana Institute for Technology Research and Innovation (BITRI) is a parastatal under the Ministry of Tertiary Education, Research, Science and Technology, established in 2012, to conduct needs-based research and development in focused areas. The mandate of BITRI is to identify, develop and/or adapt appropriate technology solutions that provides sustainable innovative solutions through co-creation and collaboration in line with national priorities and needs of Batswana.”
BIH’s reads much the same for the purpose of its creation: “Botswana Innovation Hub is incorporated as a company to develop and operate Botswana’s first Science and Technology Park to create an environment that supports start-ups and existing local companies as well as attract international companies and institutions to develop and grow competitive technology-driven and knowledge-based businesses,” it says. “As part of our mission to offer a unique platform for scientific, technological and indigenous knowledge based innovation, Botswana Innovation Hub Science and Technology Park has been strategically located on a 57 hectare site near the Sir Seretse Khama International airport and adjacent to the Diamond Technology Park in Gaborone, the capital city of Botswana.”