The laisses faire attitude that characterises Botswana’s parastatals where government subventions are guaranteed and financial discipline minimal could be a thing of the past if the government implements recommendations of a UNDP report
GAZETTE REPORTER
The United Nations Development Programme (UNDP) has urged the Botswana Government to tighten oversight over State Owned Enterprises (SOEs) and called for publication of annual reports and enforcement of strict budgetary discipline.
In a report released recently, the UN agency warned that lack of transparency and weak financial controls within parastatals pose serious risks to fiscal stability and public service delivery.
The report recommends that the government insist on timely, publicly available audited financial statements from all SOEs and adopt hard budget constraints to curb inefficiencies.
The UN agency also urged government to “reform state-owned enterprises”.
Level playing field for competition
According to the report, the aim would be to create a level playing field for competition among all enterprises, reduce use of budgetary funding and increase operational efficiency and effectiveness.
“Rebalancing the roles of the private sector and the state-owned enterprises will be key,” says the UN.
The government should therefore, make a comprehensive analysis of the SOEs; assign only commercial objectives to them, stripping them of regulatory and social functions (assigning those to independent, capacitated regulators, and to a reformed social protection system, respectively).
Published annual reports
The UN also calls on the government to strengthen monitoring and oversight and enhance transparency and accountability through published annual reports and hard budget constraints.
The UN also urges the government to improve what it calls “public investment management”. It says for large and mega-projects, the government should clarify roles and responsibilities of all public entities involved and improve costing, project preparation, and accountability.
“For Public-Private Partnerships (PPPs), strengthen the Ministry of Finance’s oversight role and clarify the legal and regulatory framework for PPPs (either by amending the Public Procurement and Asset Disposal Act or by enacting a dedicated PPP legal framework),” says the UN report.
Making use of AfCFTA
The government was also advised to “Make it much easier for the private sector to operate through comprehensive business environment reforms.
“Business environment reform should aim to level the playing field for all commercial actors, foster competition and regional integration making strategic use of the AfCFTA, and encourage export-oriented, employment-creating investments,” says the report.
It states that its (business environment reform) focus should also include provision of essential public goods for business entry and competitive operation of business; light-touch regulation to address critical risks of market failure; and efforts to minimise crowding out by the public sector, including state-owned enterprises.
Tech hubs
“Industrial policy support can be considered for a small number of activities with significant potential for attaining high productivity and at considerable scale enabling exports, but where investors perceive the risks as high.
“Such select activities could be in technology-driven manufacturing and tech hubs linking to large established international value chains, green energy projects, or in beef and textile processing for export,” says the report.