Bereng Mpaki
STATE – owned enterprises (SOE’s) within the southern Africa region are hampered by poor corporate governance due to political interference and consume large public resources to bailout.
This was highlighted during a recent meeting organised by the United Nations Economic Commission for Africa – Southern Africa office (ECA- SA).
The virtual meeting was to validate a draft report on the governance of SOE’s in South Africa for reforming SOE’s in South Africa and rest of the region.
The final report is expected to serve as a blueprint and yardstick from which the region can draw invaluable lessons to reform its SOE’s.
Held on 28 February 2021, the meeting used the ailing South Africa’s SOE’s as a reference point to what the rest of the region is experiencing.
The SOE’s struggles are seen as obstacles to the region’s economic growth, service delivery and job creation.
SOEs in this context are defined as commercially-run companies that are under the direct or indirect ownership of government.
The virtual meeting attracted a wide pool of experts from public and private sectors, civil society organizations, labour movements, regional and international development organizations, academia, research institutions and private citizens from Botswana, Lesotho, Mauritius and South Africa.
Regional organisations included the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC), United Nations Resident Coordinator Office-South Africa, and the United Nations Economic Commission for Africa (ECA).
One such expert attendant, Thabo Qhesi who is the chief executive of the Private Sector Foundation of Lesotho, told the Lesotho Times that the meeting identified poor corporate governance in the SOE board’s ability to effectively conduct their oversight functions.
He said they also identified poor management skills partly due to politically-inspired managerial appointments and poorly defined mandates of SOEs among the key challenges affecting their operation.
“The experts reiterated the dire need to appoint independent, ethical, competent SOE boards with skills and understanding of their roles with the enterprises’ best interests being the priority of the members of such Boards of Directors,” Mr Qhesi said.
He said the experts emphasised the need to employ qualified personnel in SOE’s to improve their efficiency and effectiveness.
In the case of Lesotho’s SOE’s, Mr Qhesi told the meeting that the government currently has about 20 SOEs, six of which it wholly owns and partly owns the other 14.
“On current setup six of SOEs in Lesotho were 100 percent were owned by the government namely, Lesotho electricity company; Water and Sewerage Company; Lesotho Post Bank; Lesotho National Development Corporation; Lesotho Tourism Development Corporation; and Basotho Enterprise Development Corporation.
“Fourteen other SOEs were partly owned by the government namely: Loti Brick (22, 8 percent); Maluti Mountain Brewery (10 percent). MHG Lesotho (Pty) Ltd (36, 4 percent); Lesotho Flour Mills (49 percent); Econet Telecom Lesotho (30 percent); Letšeng Diamonds (30 percent): Mothae Diamonds (30 percent); Liqhobong Mining (25 percent); Storm Mountain (KAO) Diamond (25 percent); National General Insurance Co Ltd (20 percent); National Life Assurance (12 percent); Lesotho Standard Bank (9, 65 percent); Minet Lesotho (5 percent); and Lesotho Housing and Land Development Corporation (87 percent).”
He said the Lesotho’s SOEs contribute just between two to five percent of the country’s gross domestic product (GDP), while some SOEs do not consistently declare dividends to the government.
He said their financial reporting was not done in conformity with the Companies Act and weak oversight have been exacerbated by the lack of a clear SOE policy in the country.
He also indicated that managerial appointments are not done on merit due to the fact the founding Acts and Articles of Association of the wholly owned SOEs in general did not spell out qualifications needed on the boards.
Mr Qhesi told the meeting that the government is currently developing a SOE policy with the assistance of World Bank, which includes disclosure and transparency components.
