September 23, 2024
Economy

IPPR calls for public enterprises’ autonomy

August 23, 2023
IPPR calls for public enterprises’ autonomy

The Institute for Public Policy Research (IPPR) has called for complete autonomy of public enterprises citing their inability to be dynamic and responsive within the existing institutional framework under the government. 

IPPR Researcher Robin Sherbourne said businesses and government entities operate under fundamentally different paradigms due to distinct incentives and institutional frameworks. 

Sherbourne expressed scepticism about the ability of government-owned businesses to be dynamic and responsive, primarily attributing these issues to bureaucratic processes. 

"You know, every time you want a pencil, you have to go through the Central Procurement Board. And that takes, you know, goodness knows how many months. And then, you know, you have to fill in all these papers," he explained. 

Sherbourne highlighted that such administrative hurdles hinder the efficiency and flexibility of government-run businesses, making them slow-moving and unreformable.

Sherbourne's core argument revolves around the idea that government intervention often results in sluggish, loss-making enterprises that struggle to contribute significantly to the economy.

Instead, he advocates for a clear division between the business sector and the government sector, where businesses are left to run themselves with minimal interference.

"That's why we have a business sector and the government sector. Government is the referee in the football match, impartial, penalising when necessary, setting the rules, and then letting everyone get on with it," Sherbourne emphasised.

His stance reflects the broader debate on the role of government in the economy, with some arguing for less government intervention and greater autonomy for businesses to drive economic growth.

This comes as the government in 2021 announced plans to set up a central holding company that will own all its commercial Public Enterprises within the next three years.

The plan, according to the then Public Enterprises Minister, Leon Jooste, was based on the Singapore and Malaysia model, where a central holding company becomes the owner of all commercial Public Enterprises and reports to the Minister of Finance in line with the provisions of the State Finance Act.

The plan allows shareholder functions to be greatly enhanced when the shareholder powers and budgetary functions are consolidated under the Ministry of Finance since they will then have direct oversight of the financial and operational performance of the Public Enterprises and subsidies can then be more accurately aligned to compliance and performance. 

The Department of Public Enterprises, which now falls under the Ministry of Finance, currently oversees the functions and responsibilities of the 98 public enterprises. 

Last month the government said it will consider which state-owned public enterprises it will continue to own and operate in collaboration with private businesses or sell once the Ownership Policy Framework of entities has been finalised.

Finance and Public Enterprises Minister Iipumbu Shiimi revealed the government’s intentions on the future of public enterprises during a mid-term budget discussion held by the IPPR.

“Why should the government own public enterprises and what is the objective and how do we manage it and how do we own public enterprises,” Shiimi said.

The government was now seized with discussing the modalities of the framework, to identify public entities it had a key interest in to continue owning them and to consider divesting from some, Shiimi said.

“Once we have agreed on that policy framework, we will then start asking the question, does this fit in the framework or do we have SOEs framework and then we can start to do further work on the framework,” he said.

The framework is expected to enter the public forum soon, for further input, Shiimi said.

“It has been presented to Cabinet and I believe the civil society organisations will also be consulted,” he said. 

Shiimi in previous engagements held on the matter stressed that there was neglect of the government's assets, citing rail operator TransNamib as an example.

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Last modified on Thursday, 24 August 2023 19:38
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