Windhoek: The independent oversight of state-owned enterprises (SOEs) is often diffused and political influence can often interfere with it, the chief executive officer of Old Mutual Africa Operations, Johannes !Gawaxab, said yesterday. Speaking during a two-day public finance management workshop, !Gawaxab said very few SOEs have effective oversight mechanisms, and most public enterprises are insulated from failure.
"Public enterprises are not allowed to go insolvent because Government generally bails them out. If they fail, the option of a takeover bid, which may be viable for private companies, is also out of the question," he said.
He said this means boards and management teams may easily become complacent, adding that the setting of performance indicators and the measuring of performances of SOEs, including the performance of managements and boards, appear to exist only in law to some extent. "In practice, performance management is often unclear, uncoordinated, vague and not implemented," !Gawaxab said.
It is an accepted fact that SOEs require experienced and qualified directors and chief executive officers (CEOs). Government, as the shareholder, often has the right to appoint the board. "This may create accountability challenges. In the same cases, board appointments are politically- motivated, which may adversely impact strategy execution, policymaking and fulfilment of the mandate, given the experience, expertise and qualifications of some board members appointed solely on political grounds," !Gawaxab said.
A board, in accordance with best practice, should be the centre of corporate governance, and it is arguable whether this is always the case for most public enterprises. !Gawaxab said Government as the owner of SOEs is entangled in a position of having to play multiple roles.
On one hand, it is a shareholder and concerned with returns on investment and infrastructural development, and on the other hand, Government is also a policymaker, overseeing the implementation of policies. Government further acts as the regulator, supervising industry practices and protecting the interests of consumers.
"These roles are at times competing and incongruent," !Gawagab said.