- Gov’t to shut down loss making parastatals
- BPC, Botswana Post, BAMB listed as targeted
- Move to eliminate duplication and overlapping mandates
SESUPO RANTSIMAKO
With a decline of more than P12 billion in the Government Investment Account (GIA), in just less than a year, government has announced its plans of shutting down certain parastatals and state owned enterprises (SOEs) for continuously registering losses.
During Monday’s Budget Speech Minister of Finance and Economic Development, Dr Thapelo Matsheka revealed that the GIA, which houses Botswana’s foreign reserves has declined from P17.8 billion in November 2019 to just P5.6 billion as at November 2020.
Although some still rally in shock and have called for government to comprehensively explain this huge decline, Matsheka said the funds were drawn down to finance imports, as well as other external government obligations.
The idea of shutting down some parastatals is believed to be part of austerity measures aimed at reducing government spending and to address duplication and overlapping mandates. In addition to these measures, Minister Matsheka said some parastatals have been identified for privatization. “I am pleased to report that a comprehensive rationalization strategy covering all parastatals has been developed,” he said. “Implementation of the strategy will address issues such as duplication of activities and overlapping mandates. The review will also make proposals for improvements in SOE corporate governance.”
This is a part of austerity measures aimed at reducing government spending and to address duplication and overlapping mandates. In addition to these measures, Minister Matsheka said some parastatals have been identified for privatization. “I am pleased to report that a comprehensive rationalization strategy covering all parastatals has been developed,” he said. “Implementation of the strategy will address issues such as duplication of activities and overlapping mandates. The review will also make proposals for improvements in SOE corporate governance.”
“This will involve a review of mandates as well as founding statutes, and will align them to the transformation agenda. It is my intention that decisions will be made on rationalizing, restructuring, privatization and liquidation of SOEs in the first half of 2021. The problems in the SOEs are unfortunately confirmed by the continued poor financial performance of many of them.”
“Even though some SOEs registered profits in the 2019/2020 financial year, these were in most cases lower than in the previous year. These results indeed illustrate the critical importance of restructuring the SOEs sector, including potentially closing down perennial loss makers, as we cannot continue bailing out these companies from our scarce tax revenues.”
Botswana Power Corporation (BPC) with a net loss of P1.4 billion in 2019/20 compared to the prior year’s net profit of P201.1 million, Botswana Post with a net loss of P45.0 million compared to a net loss P0.95 million in 2018/19, and Botswana Agricultural Marketing Board (BAMB) with a net loss of P40.7 million, compared to a net profit of P70.8 million in 2018/2019, are among parastatals and SOEs that the minister mentioned as targeted for rationalization and shutting down.
“BPC’s loss reflected increased power imports due to the poor performance of Morupule B Power Station while Botswana Post’s loss was due to a rise in other operating expenses,” Matsheka said. “Likewise, BAMB’s loss was attributable to an impairment loss and substantial increase in cost of sales.”
The minister emphasized the need to follow the best principles of corporate governance “by providing audited accounts on time”, among other control measures. “In future, the management will be held accountable while shareholders will allow boards and management to do their jobs in line with best practices in the private sector. SOE’s will also be required to raise a greater portion of their own revenues,” Matsheka said.