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Govt’s bid to reform state enterprises 

by Lesotho Times
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Bereng Mpaki

THE government has roped in United Kingdom-based consultancy firm Unicon Ltd, to spearhead its state-owned enterprise reform initiative.

The initiative is part of a wider five-year Public Financial Management Reforms project which is financially supported by the World Bank, European Union and African Development Bank (AfDB.

Set to run from 2014 to 2019, the project will review the legal framework for various state-owned enterprises and also recommend measures the government should take performing entities.

Some of the key objectives of the project is to improve SOE oversight and transparency through regular monitoring of financial and operational SOE performance and fiscal implications from transfers, taxes, dividends, royalties, subsidies, loans and guarantee.

The project will also develop a national SOE Policy and Program, outlining government objectives for state ownership and targets by sector or company, as well as clear institutional structures for achieving these objectives and their accountability structures and reporting lines and obligations to improve SOE corporate governance.

Officially launched on the 13th of this month, the project comes amid growing public displeasure over the poor performance and failure to declare dividends by some state owned enterprises.

The government has interest in 30 enterprises consisting of 14 state-owned enterprises and 16 state-invested enterprises. Some of the state owned enterprises include regulatory institutions, commercial and policy driving institutions.

In his budget speech earlier this year, finance minister Moeketsi Majoro indicated that some public enterprises have not been consistent in the declaration of both profits and dividends. These companies included Lesotho Flour Mills, Econet Telecom and Avani Lesotho among others.

Addressing a recent high level meeting for senior government officials, government agencies, executives of state owned enterprises that also served to launch the project, Dr Majoro said the reform will ensure different state enterprises efficiently and effectively deliver on their mandate.

He further noted that the reform project is also expected to address the varying performances of the state-owned enterprises.

The minister further said there was a need to standardise their corporate governance structures and performances to ensure efficient public service delivery of each public organisation.

“The enterprises’ performance vary considerably as some are performing well while others are performing extremely badly. And so, it points to why we need to standardise their performances,” Dr Majoro said.

He said there are some state-owned enterprises which, although they are commercial, continually depend on the government funding to operate.

“As we know the narrative in Lesotho today is the concern for state-owned enterprises’ ability to make profit and declare dividends and that concern is now being addressed by the project.

He said the project would also review each organisations governance structure so that there is a clear criterion on who should sit in the respective boards.

“The variation of sitting allowances in the state-owned enterprises varies from M200 per sitting to M20 000 per sitting. It depends on which board you are appointed into,” he said.

Dr Majoro added that as a result of the differences in the sitting allowances, prospective board members tend to be choosy on which boards they sit.

The project is also expected to develop a national code of corporate governance and also a state-owned enterprise policy.

Meanwhile, the Private Sector Foundation (PSFL) chief executive Thabo Qhesi has welcomed the government’s initiative to scrutinise the performance and governance of state-owned enterprises. He said this was crucial because many have veered off the course of their mandates.

 

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