3rd Meeting of the OECD Network on the Governance
of State-Owned Enterprises in Southern Africa
Forging Ahead with Reforms
SESSION 1: OVERVIEW OF THE RECENT REFORM PROCESS
DBSA Vulindlela Academy, Midrand, South Africa 8 – 9 October 2012
1
The SOE Sector in Angola 3
1. The State Enterpreneurial Sector of Angola
2. The Institutional Framework
3. The Legislation
4. Challenges for the Implementation of Effective Governance Guidelines for the Region (SADC)
In Angola, the SES is composed of a significant number
of (i) Wholy owned and (ii) Partially owned public
enterprizes, operating in different sectors of economic
activity
This is a direct consequence of the planning economic
system that existed in Angola up until the end of the 80’s.
SOE´s 4
The State Enterpreneurial Sector of Angola
Sector Empresarial 5
Wholly Owned SOE’s by Sector of Economic Activity
6%
6%
9%
6%
12%
0% 11%
2% 6%
3%
21%
18%
AGRICULTURA E PESCAS
COMÉRCIO (LOGÍSTICA E DISTRIBUIÇÃO
DE ALIMENTOS)
COMUNICAÇÃO SOCIAL
EDUCAÇÃO, SAÚDE E SANEAMENTO
BÁSICO
ENERGIA E ÁGUA
HOTELARIA E TURISMO
INDÚSTRIA, GEOLOGIA E MINAS
PETRÓLEO E GÁS
SERVIÇOS FINANCEIROS
TELECOMUNICAÇÕES E TECNOLOGIAS
DE INFORMAÇÃO
TRANSPORTES
URBANISMO E CONSTRUÇÃO
The SOE Sector in Angola
Are created by a government (head of state) decree, with the joint initiative of a line ministry and the shareholding ministry (Ministry of Economy);
It’s 100% owned by the state; Their Governance bodies are comprised of: 1. The Board of directors: with a maximum of
11 directors, including 2 non-executive directors;
2. The Fiscal Boad: composed of a chairmain and two additional members
Sector Empresarial 6
Are created in accordance with the company (comercial) law;
In essence, they are business corporations in which the state has the majority stake and can be established by:
(i) Other wholly owned Public Enterprises (PE’s);
(ii) Subsidiaries of PE’s; (iii) Public (State) institutes; (iv) Private Companies; (v) Private individuals
Sector Empresarial 7
Its governance bodies consists of:
Anual General Meetings
Board of Directors
Fiscal Board
Sector Empresarial 8
The Institutional Framwork 9
1. The State Enterpreneurial Sector of Angola Sector
2. The Institutional Framework
3. The Legislation
4. Challenges for the Implementation of Effective Governance Guidelines for the Region (SADC)
Sector Empresarial 10
The Institucional Framework
We have a dual governance system of SOE’s: Sectorial Oversight – exerted by the line Ministries
in charge of different sectors of economic activity (e.g. Transport, Miming, Construction, Finance, Agriculture) Ownership Function – exerted by the Economic Ministry, through the (i) GTSEP – Tecnical Office for the SES and (ii) ISEP – Institute for Public Sector Enterprises
Sector Empresarial 11
The Institucional Framework
Line Ministries
Specific Role/Tasks: Policy formulation and regulation of the sector that falls under its portfolio; Evaluation of plans and bugets proposed by the companies; Take part on the evaluation of SOE Boards; Take part on the appointment and firing of SOE Board members;
Fonte: Lei 9/95 de 15 de Setembro
Sector Empresarial 12
The Institucional Framework
The Role of the Ministry of Economy (Shareholder)
Formulation, coordination e execution of the ownership policy of the state; Proposing legislative and regulating measures for the management of the assets of SOE’s; Proposing and coodinating the implementation of the privatization policy; Participating in the monitoring and validation of the framework of PPP’s;
* Fonte: Decreto Presidencial nº 1/11 de 3 de Janeiro
Sector Empresarial 13
The Institucional Framework
Ministry of Economy: Organizational Chart
* Fonte: Decreto Presidencial nº 1/11 de 3 de Janeiro
Sector Empresarial 14
The Institucional Framework
Ministry of Economy -
Technical Office for the State Entrepreneurial Sector (SES)
Plays a strategic Role, specifically:
Preparation of policy proposal on the SES
Legislative proposals in the field of privatization
Research relevant to the SES
* Fonte: Decreto Presidencial nº 1/11 de 3 de Janeiro
Sector Empresarial 15
The Institucional Framework
Institute for Public Sector Entreprises
Plays a Tecnical/Operational Role:
Policy execution related to the SES including
privatization of SOEs;
Monitoring and technical assistance to enterprises
Decreto 37/09 de 13 de Agosto
Sector Empresarial 16
The Institucional Framework
Institute for Public Sector Entreprises
Evaluation of strategic, business and investment plans as well as
anual and plurianual budgets of SOEs;
Propose methods and standards for accountability and enforce the
terms of accountability;
Propose guidelines for the administration and control of the assets of
SOEs
Fonte: Decreto 37/09 de 13 de Agosto
Specific Tasks
Sector Empresarial 17
The Institucional Framework
Institute for Public Sector Entreprises
Evaluation of financial statements and reports of SOEs;
Proposing inspections (probing) of SOEs;
Keep up dated technical, economic and financial data of SOEs;
Propose the necessary tools to ensure the effective management of
state shareholdings
Fonte: Decreto 37/09 de 13 de Agosto
Specific Tasks (Cont.)
Sector Empresarial 18
The Institucional Framework
Institute for Public Sector Entreprises (Organizational Chart)
Fonte: Decreto 37/09 de 13 de Agosto
Sector Empresarial Público em Angola 19
1. The Angolan State Enterpreneurial Sector
2. The Institutional Framework
3. The Legislation Governing SOE’s
4. Challenges for the Implementation of Effective Governance Guidelines for the Region (SADC)
Sector Empresarial Público em Angola 20
The current legislation governing the SES is the following:
Law 9/95 Law of Public Enterprises
Decree n.º 8/02 Regulation to the Law of Public Enterprises
Law n.º 10/10 Amendments to the Law of Public Enterprises
Sector Empresarial Público em Angola 21
• Under the restructuring process of the SES, the Government is expected
to approve the following legal instruments:
Framework-Law of the SES – New law of the State Enterpreneurial
Sector
Regulation of the framework law of SES
The Statute (status) of Public Managers
Remuneration Statute of Public Managers
Sector Empresarial Público em Angola 22
1. The Angolan State Enterpreneurial Sector
2. The Institutional Framework
3. The Legislation Governing SOE’s
4. Challenges for the Implementations of Effective Governance Guidelines for the Region (SADC)
Sector Empresarial Público em Angola 23
KEY CHALLENGES FOR THE IMPLEMENTATION OF EFFECTIVE GOVERNANCE GOVERNANCE :
Countries have different forms of organization of their states;
Countries are in different stages of their economic and social
development;
Countries posses institutions (public and private) on different stages
of their organizational and funcional development
Sector Empresarial Público em Angola 24
Gradual approach for the establishment of good practices for SOE
governance, by means of issuing tecnical guidelines or standards of
relevant common interest, namely:
A framework for monitoring and evaluation of SOEs performance;
Treatment of public infrastructure on the books of SOEs;
Accounting for subsidies and other transfers from the state to
SOEs;
Appointment and evaluation of board members;
Remuneration of SOE board members;
Performance contracts (framework) between the state as
shareholder and SOE board members;
PEEPA
THE 3RD MEETING OF THE OECD NETWORK ON THE GOVERNANCE OF
SOEs IN SOUTHERN AFRICA
8 – 9 OCTOBER
OVERVIEW OF THE CURRENT REFORM PROCESS - BOTSWANA
PRESENTED BY
MR KGOTLA M. RAMAPHANE – CEO PEEPA
Botswana at a glance
27
THEME SUBJECT YEAR INTERNATIONAL COMPARISON
Geography / Demography
Land Area 582 000 km2
48
Population 2 Million 2012 144 Labour Force 1.3 Million 2012 137
Economy GDP 17 Billion USD 2011 111 GDP Growth rate 4.60% 2011 78
GDP Composition Agric 2%, Ind 45%, Manf 53% 2011
Govt Contribution to GDP 2011 GDP/Capita 16 000 USD 2011 74
Industrial production growth rate
11% 2011 10
Investment (GFCF) 28% of GDP 2011 25 Exports 6 Billion USD 2011 Imports 6 Billion USD 2011
Public Finances Revenue 5.6 Billion USD 2011
Expenditure 6.2 Billion USD 2011
Taxes and Revenues 32% of GDP 2011 81 Public Debt 14.5% of GDP 2011 126
The Botswana SOE Landscape
28
There are currently 34 SOEs in Botswana
Ownership and oversight of PEs is decentralised to line Ministries
Oversight is devolved to Boards of Directors and control to Executive Management.
Established as Statutory Corporations or under the companies Act
Includes both:-
16 Commercial entities e.g. utilities, service providers, banking services etc.
18 Non-commercial entities e.g. as regulatory bodies, research institutions, investment promotion agencies and tertiary education institutions
Non commercial Public entities depend entirely on Government subventions (Estimated at P2 billion in 2011/12)
Financing constraints due to global economic slowdown
Commercial SOEs were initially capitalized by Government, but are at liberty to raise debt capital in the market
Sometimes Government however provides a guarantee for the loans
29
FISCAL IMPLICATIONS OF SOE
The Botswana SOE Landscape
30
SOE Involvement in regional integration:
• Electrical power generation
• Telecommunications interconnectivity
• Rail transport systems
• Air travel
• Cross border trade facilitation
KEY SOE GOVERNANCE REFORMS
• The Privatisation Policy of 2000
– Established PEEPA
– Mandates PEEPA to assist government in exercising oversight over the
performance and governance of SOEs.
The Privatisation Master Plan of 2005
– Provided for an integrated Corporate Governance framework
– Corporate Governance, formalised through shareholder compacts as the
main instrument in the exercise of shareholder oversight.
– Framework incorporates other elements such as Merit based Board
selection process, Board charters Board evaluation and codes of conduct.
• Revised Incomes Policy of 2005
– Entrenches elements of the corporate governance framework in the
Governance of SOEs
• Botswana Institute of Directors 2010
– Draft code of corporate governance for Botswana
31
KEY SOE GOVERNANCE REFORMS
PEEPA has integrated these elements of shareholder oversight into a framework of governance instruments intended to:
– Provide clarity on Government’s expectations of the SOE performance
– Promote achievement of mandates/objectives of the SOEs
– Enhance shareholder oversight
– Promote greater accountability and transparency
– Allow for the monitoring and evaluation of SOE performance
32
AN INTEGRATED FRAMEWORK
• Board Performance Evaluation
• Merit based board nomination process
• Board Charter
• Shareholder Compact
Strategic alignment
Strategic resourcing
Performance contracting
Delegation of authority
Board Roles and Responsibility
Compliance
Performance
Development
Sustainability
Board composition,
balance competence
PROGRESS TO DATE - UPTAKE OF THE
CGF
0
2
4
6
8
10
12
14
16
18
Shareholder Compact Board Charter TMBBNP Board Evaluation Toolkit
CG INSTRUMENTS
2012 Survey
CHALLENGES TO SOE GOVERNANCE
REFORMS
1. No clear and consistent Ownership policy and adoption of
best practice framework still discretionary in SOEs due to
decentralised ownership of PEs
2. Restrictive legislative frameworks
3. No clear separation of social, developmental and
commercial objectives
4. Poorly remunerated Non Executive Directors
5. Low levels of awareness of Corporate governance best
practice in Botswana
35
FUTURE DIRECTIONS
Develop an Ownership Policy for SOEs.
Create corporate governance capacity in government
and SOEs
Finalise Code of Corporate governance for Botswana
Address issue of remuneration of Non Executive
Directors
Third Meeting of the OCDE Network on Gorvernance of State Owned Enterprises in
Southern Africa 8-9 October 2012
Midrand, South frica
L’ETAT DES LIEUX DE LA REFORME DES ENTREPRISES DU PORTEFEUILLE
DE L’ETAT
Alex N’kusu Dongala Siya
Secrétaire Exécutif Adjoint du COPIREP
Plan de la Présentation
1. Introduction
2. Réalisations à ce jour
– Modernisation du cadre juridique et institutionnel
– Diagnostics et Options stratégiques des entreprises
– Missions de stabilisation des activités
– Opérations de désengagement de l’Etat
3. Transformation des Entreprises Publiques
• Etablissements et services publics
• Sociétés commerciales
4. Questions transversales
– Dimension sociale de la réforme
– Dettes et Créances croisées.
I. Introduction • La réforme des entreprises publiques :
– S’inscrit dans le cadre des réformes économiques initiées par le Gouvernement depuis 2001;
– S’inspire des réformes sectorielles initiées par chaque Ministère sectoriel;
– Les réformes économiques ainsi engagées visent à stimuler la compétitivité de l’économie et à relancer la croissance économique.
• Principes directeurs
– Secteur privé : rôle de production et création richesses
– Etat: rôle normatif et régulateur
Désengagement progressif du secteur marchand
1. Introduction (suite)
• Stratégies
• Modernisation du cadre juridique et institutionnel
• Réformes sectorielles
• Restructuration des entreprises au cas par cas
• Réforme du Conseil Supérieur du Portefeuille (CSP)
• Secteurs cibles et Entreprises prioritaires:
• Secteur des Mines: GECAMINES;
• Secteur de l’Energie: SNEL et REGIDESO
• Secteur des Transports: SNCC, SCTP, RVA et RVM
• Secteur des PTT: SCPT
• Secteur Financier (Assurances): SONAS
2. Réalisations à ce jour • Modernisation du cadre juridique et institutionnel régissant le
secteur des entreprises du Portefeuille. C’est l’acte fondateur de la réforme. Promulgation des quatre (4) lois ci-après:
• La Loi N°08/007 du 7 juillet 2008 portant dispositions générales relatives à la transformation des entreprises publiques;
• La Loi N°08/008 du 7 juillet 2008 portant dispositions générales relatives au désengagement de l’Etat (Conseil des Ministres : organe de décision – COPIREP: exécutant les décisions gouvernementales.)
• La Loi N°08/009 du 7 juillet 2008 portant dispositions générales applicables aux établissements publics;
• La Loi N°08/010 du 7 juillet 2008 fixant les règles relatives à l’organisation et à la gestion du Portefeuille de l’Etat.
Publication de 5 décrets d’application
2. Réalisations à ce jour (suite)
• Résultats de la transformation des Entreprises publiques
– 20 entreprises transformées en sociétés commerciales (statuts publiés au J0)
– 20 entreprises transformées en établissements publics (statuts publiés au J0)
– 5 entreprises transformées en service public
– 6 entreprises non viables, dissoutes et en liquidation
2. Réalisations à ce jour (suite)
• Contraintes de la transformation en sociétés commerciales
– Publication des statuts avec des capitaux sociaux provisoires (respect délai légal)
– Due diligences juridiques et financières
• Patrimoines non maitrisés
• Endettement excessif (dettes croisées avec Etat et EP)
• Etats financiers non fiables
• Travaux en cours pour détermination des capitaux réalistes et bilan d’ouverture
– Inventaires et évaluation patrimoines
– Règlement dettes et créances croisées
– Règles de reprise des passifs non assurables
2. Réalisations à ce jour (suite)
• Restructuration des Entreprises publiques (Sociétés commerciales)
– Réalisation des études diagnostics des entreprises structurantes (techniques, opérationnel, financier et organisationnel
– Définitions des options stratégiques de
restructuration:
• Phase de stabilisation
• Phase de restructuration profonde (par le biais des PPP)
2. Réalisations à ce jour (suite)
• Missions de stabilisation des activités : Stratégie Intérimaire.
– 1ère Phase de restructuration qui s’applique à des entreprises dont l’activité est vitale et certaines en danger de cessation d’activités.
– Objectifs visés: arrêter la dégradation de la situation technique, opérationnelle et financière de l’entreprise.
– Ces missions ont été mise en place avec le concours des firmes internationales spécialisées dans les entreprises ci-après :
• GECAMINES
• SCTP
• RVA
• SNCC
Quelques résultats obtenus mais timides faute de financement conséquents
– Ce processus est en préparation à la SNEL et à la REGIDESO qui devront bénéficier de contrats de services à conclure pour chacune d’elles avec un opérateur privé spécialisé (contrat de performance).
2. Réalisations à ce jour (suite) • Quelques options stratégiques retenues
– SNCC:
Désengagement des autres activités
Concession intégrée
– RVA
Séparation des activités (navigation aérienne et d’exploitation aéroportuaire)
Mise en place des PPP pour l’exploitation aéroportuaire
– SCTP
Transformation en société de patrimoine
Mise en place des PPP pour les activités opérationnelles (Ports maritimes, Chemin de fer, Ports et transport fluvial, etc.)
– REGIDESO
Transformation en société de patrimoine
Mise en place des PPP pour la production et la distribution de l’eau
2. Réalisations à ce jour (suite et fin)
• Opérations de désengagement de l’Etat
Quelques opérations déjà engagées:
• Hôtel KARAVIA: Concession BOT de 15 ans. Rénovation et la Exploitation de l’Hôtel à ses frais contre paiement redevance annuelle de 2% du chiffre d’affaires à l’Etat.
• CCT : Vente actions de l’Etat (49%)
• Fleuve Congo Hôtel : Concession BOT: Transformation d’un immeuble moderne appartenant à l’Etat en hôtel 5 étoiles
• CINAT: cession des 58 % sur les 92% que détient l’Etat dans cette société d’économie mixte. Négociation en cours.
• SOSIDER: Concession BOT de 20 ans. Attente signature.
2. Réalisations à ce jour (suite et fin)
• Aéroport International de N’djili : Projet de mise en concession du terminal passagers (En cours)
• SCTP : Ports maritimes et Chemin de fer : Etudes de mise en œuvre des PPP possibles
4. Questions Transversales qui plombent la réforme
• Dimension sociale de la Réforme
– Problème crucial qui obère la mise en œuvre de la réforme
– Nécessité d’une approche globale faisant l’objet d’un consensus gouvernemental
– Risques majeurs de disparition des pans entiers de savoir-faire suite aux départs à la retraite.(ONATRA : seuls 200 agents resteraient en fonction à fin 2011).
– Coûts sociaux en jeu dans le cadre de la réforme estimés à plus d’un milliard des dollars américains.
4. Questions Transversales (suite et fin)
• Dettes et créances croisées
– Les entreprises du Portefeuille de l’Etat possèdent des dettes et créances entre elles d’une part, et avec l’Etat de l’autre;
– Cette situation empêche certaines d’entre elles d’être performantes à cause du volume important des créances accumulées sur les autres entreprises du portefeuille et sur l’Etat;
– Des saisies-arrêts sont opérées sur les comptes des débiteurs par les créditeurs appartenant pourtant tous au même propriétaire.
– L’examen attentif et la résolution de cette question permettra une mise en œuvre facile du processus de leur réforme.
PSDPSD
Ministry of Finance and Development Planning
PSDPSD
Taking stock of the SOEs in Lesotho
Private Sector Development
A Brief Overview Prepared by Reitumetse Elias
Private Sector Development Manager: Ministry of Finance
PSDPSD
Presentation Outline
1
2
3
Current Realities
-Poor SOE’s performance
Conclusion
-Political Undercurrents
-Poor Accountability & Reporting Mechanisms
Ministry of Finance and Development Planning 1
4
Connection with other Regional integration Initiatives -Integrated action plans
-Membership to umbrella organisations
-Peer Review Mechanisms
Challenges Faced
- 25% of SOE’s highly subsidised by Government
- New National Strategic Development Plan
-Socio-oriented investment decisions
PSDPSD
Prevailing dynamics
1. Highly subsidised SOE’S New
Political Dispensation
2. Phasing out of the NSDP
3. Ill informed investment decisions
2 Ministry of Finance and Development Planning
PSDPSD
Challenges Experienced
Underperformance of the majority of
the SOEs
Interference from powers that be
Poor adherence to reporting
mechanisms
PSDPSDThe Bigger Picture…
Efforts & activities of the SOEs are informed by
international, regional & national initiatives
Millennium National Strategic Sectoral &
Development Development Ministerial
Goals Plans Plans
To ensure that we are part of this picture we:
-subscribe to networks
-active members of APRM
-tap on regional & global knowledge reservoirs & technical support
-align our efforts with regional & international partners
State Owned
Enterprises
3 Ministry of Finance and Development Planning
PSDPSDIn conclusion………
Lesotho still has a long way to go to improve performance of SOE’s through
Enabling governance structures Sufficient capital resources
-Policy Framework -Vibrant PPP
-Robust M& E -Multiple Sourcing
-Rigorous reporting -Capital Venturing
Continuous learning from best practice
-R& D
-Networking
-Peer Review Mechanisms
5 Ministry of Finance and Development Planning
Republic of Mauritius
There are around 150 (SOEs) representing some 15 % of GDP in almost all economic sub-sectors including the utilities, commercial, economic, educational, welfare, social, and cultural sectors employing around 20,000 people or 1.6 percent of the population.
Six out of 15 large SOEs had an operational deficit in 2010, the highest number since 2006; and government transfers to SOEs are amounted to 3 percent of GDP in 2010
Total SOE debt was 7 percent of GDP or 12.5 percent of total public debt in 2010 with half of it being guaranteed by the government
Unfinished reform agenda
Republic of Mauritius
Many SOEs operating in areas where they do not
address any identified market failure or provide
any public goods
Inadequate pricing policies negatively impact
SOE financial sustainability and public sector
investment.
Many SOE’s services continue to be costly and of
poor quality,
Unfinished reform agenda
Republic of Mauritius
The performance of SOEs in terms of service delivery was
undermining overall economic competitiveness
They are not held fully accountable for their performance;
There is no clear demarcation of the ownership and oversight
roles and a lack of transparency and accountability
They do not publish annual reports without being penalised for
non-compliance and
They do not have strategic plans or any targets or
performance indicators agreed between the respective sector
ministries and their boards.
Unfinished reform agenda: Challenges
Republic of Mauritius
A phase-wise approach
An ambitious Public Enterprise Reforms Programme was initiated
in 2007. A Big Bang approach:
• Centralizing of all revenue departments under the Mauritius
Revenue Authority; closing down the DWC and the Police Garage
in 2008
• Removal of subsidies on rice and flour
The focus initially was to go for some quick gains .
Strong opposition to reforms
A more gradual approach adopted aiming at efficiency
improvement leaving the major reforms for a subsequent stage.
Republic of Mauritius Results limited; hands off approach; not underpinned by monitorable action plans Laying down the foundation
The first phase of State-Owned Enterprises Reform
• Developing the PEMITS (Public Enterprise Management
Information and Tracking System), an online database system to
monitor performances of SOEs.
• In depth study of some SOEs in financial difficulties.
• A Joint Public Private Steering Committee to oversee the
restructuring of the service providing institutions in the sugar
sector.
• Business Process Reengineering, reorganization and
streamlining of processes
Republic of Mauritius
A new dynamism supported by a first Public Sector Performance DPL with the World Bank.
In 2011, a lead agency was created , the Office of Public Sector Governance (OPSG), within the Prime Minister’s Office to provide leadership, coordination and cohesion to the implementation and monitoring of reform initiatives
OPSG accompanying SOEs in implementing their performance
enhancing reforms
With the help of the WB , development of an action plan for
OPSG
The Second phase of State-Owned Enterprises Reform
Republic of Mauritius
The Second phase of State-Owned Enterprises Reform
An action plan oriented towards an outcome-oriented public sector
A gradual approach within a framework
• that holds sector ministries and SOEs accountable
• which will foster a dialogue among all stakeholders and
• clearly define the efficiency gains that must be achieved
by each SOE.
Republic of Mauritius
Main elements of Action Plan
The Second phase of State-Owned Enterprises Reform
• The classification the Public Entities for e.g into commercial Public
Enterprises and non commercial Public Entities
• Updating the Public Financial Management to clarify the
ownership relationships between the state and SOEs
• All SOEs must have strategic plans and business plans
• Each SOE should conclude a “Corporate Objectives Statement”
(COS). This COS must be agreed to by the board and the parent
Ministry.
• Improved monitoring using the Parastatal Information
Management System (PIMS) to gather relevant, accurate, and up-
to-date information to benchmark their performance and monitor
efficiency gains
• Reform plans for underperforming SOEs and
• Additional analytical work to better understand key parameters and
trends in the public sector.
Republic of Mauritius
Some performance targets :
Assistance to 8-10 SOEs to implement a Corporate Objective Statements (COS) and completion of 3 COS by end 2012 and 10 for 2013
PIMS fully operational with 40 SOEs included in the system by the end of 2012 and 100 for 2013 and
Restructuring of 2 SOEs in 2012 and 5 in 2013.
The Second phase of State-Owned Enterprises Reform
SOE CORPORATE GOVERNANCE
INSTRUMENTS AND
CHALLENGES IN MOZAMBIQUE
By: Odete Tsamba Executive Director
State Shares Management Agency
(IGEPE) Midrand, 8-9 October 2012
71
IGEPE MANDATE
• IGEPE was created in 2001 by a Council of Ministers Decree (41/2001) of December 21st with the mandate of: Managing State Shares in business partnerships Rendering support services to companies and ensure
adequate management instruments and planning Defining and managing the Directors carrier path Ensuring preparedness and training for those involved in
SOEs management
▫ IGEPE is accountable to the Minister of Finance
72
SOEs PORTFOLIO
• SOEs in Mozambique are composed by: ▫ Public Enterprises (PE) owned 100% by the State (11) ▫ Government Linked Companies (GLC) with State participation
of at least 50+1% (15)
• The State holds significant shares in as many as 140 enterprises
• PEs are under the Ministry of Finance (The treasury) control
• GLCs are controlled by the State Shares Management Agency (IGEPE)
73
IGEPE AND PORTFOLIO MANAGEMENT
• IGEPE controls a portfolio of 129 companies • Appoints Directors in companies where it is the major
shareholder • Collects quarterly reports from SOE s Managers on
Companies performance • Is represented in all SOEs Annual Shareholders
meetings • Channels share dividends from SOEs to the State
Treasury (Ministry of Finance)
74
GOVERNANCE INSTRUMENTS • Corporate Governance in Mozambique is rooted in
the following instruments: ▫ The Commercial Code: Governs the establishment, operations and governance
of corporations and enterprises in Mozambique (Act 2/2005 of December 27th)
▫ Directors Regulations (28/2007 of August 23rd) ▫ Procurement decree (15/2010 of May 24th ): Regulates the procurement of goods and services by
Public entities ▫ Money Laundering law (7/2002 of February 5th): Supports the combat on economic crimes
▫ Corporate Governance Best Practices Guide
75
IGEPE CORPORATE GOVERNANCE BEST PRACTICES GUIDE
• Inspired by OECD Corporate Governance principles, IGEPE developed in 2009 a Corporate Governance Best Practices Guide containing: ▫ Description of the legal background highlighting
Governance principles ▫ Corporate Governance values ▫ The role of State as owner and partner ▫ The shareholders annual meeting ▫ Shareholders rights and duties
76
IGEPE CORPORATE GOVERNANCE BEST PRACTICES GUIDE
▫ Board Structure, composition and duties ▫ Appointment of board members, code of conduct
and conflict of interests ▫ Board remuneration (the fixed and variable parts) ▫ Board support Committees (Remuneration, best
practices, risk management, Auditing, investments…)
▫ The Fiscal Board ▫ Independent Auditing (importance of independent
auditing and appointment of auditors)
77
IGEPE CORPORATE GOVERNANCE BEST PRACTICES GUIDE
• Current Developments: ▫ Dissemination of the Guide among SOEs
Managers ▫ Review of the Articles of Association of SOEs to
abide by the Guide ▫ Review of SOEs Governance Models
• By the end of 2013 all main SOEs under IGEPE are due to comply with the Best Practices Guide
78
NEW GOVERNANCE INSTRUMENTS
• Employees Empowerment
▫ During the privatization process in 90’s the Government of Mozambique reserved up to 20% shares to Employees, as a way of ensuring the minorities' rights
▫ However employees could not afford to pay for their equity shares
79
NEW GOVERNANCE INSTRUMENTS
▫ A new Decree (19/2011 of May 26th) establishes: A fixed term of 18 months for employees to
decide to acquire their reserved share Employees shall forfeit 50% of the reserved
equity share In return the government gives at a
simbolic value of $US0.04 (1MT) the remaining 50% Employees may decide to sell their freely
acquired share
80
NEW GOVERNANCE INSTRUMENTS
• CODE OF ETHICS FOR THE PRIVATE SECTOR Produced by the Mozambique’s Institute of Directors ▫ Based on business best practices ▫ Refers to the principles of Integrity, Respect and
Responsibility ▫ The guidelines are based on a “yes” response to the
following main decision-making filters: Is it legal? Is it policy? Is it ethical? Can I live with it?
81
NEW GOVERNANCE INSTRUMENTS
• THE SOE LAW (6/2012 of February 8th) for Public Enterprises (PEs) Establishes a 4 year “Management Contract” between the Sectorial Minister and the SOE Managers which includes: ▫ Enterprise development Policy ▫ Quantified objectives ▫ Investment practices ▫ Refinancing Criteria
82
NEW GOVERNANCE INSTRUMENTS
• THE SOE LAW (Cont.) • This law is stricter in the following issues:
▫ Financial control by the controlling entity ▫ Iinternal control based on ruling auditing principles Measures to minimize fiscal risk
▫ Monthly reporting to financial controlling entity
83
NEW GOVERNANCE INSTRUMENTS
• Management Contract: (for GLCs under IGEPE) ▫ IGEPE is developing a set of performance indicators to be
agreed with the managers at the beginning of their term. These include: Financial results (Profit); Share dividends distribution; Processes and product development; Investments and reinvestments (business expansion); Best practices implementation (Based on the Best
Practices Guide); Improvements in human capital and organizational
systems (training, new supporting technologies…). Indicators will be used for managers
evaluation and will impact on job retention.
84
NEW GOVERNANCE INSTRUMENTS
• Investment policy • The policy is being revised to emphasize
the following: ▫ strategic sectors where Government (IGEPE)
should invest new prospects for IGEPE portfolio and future
investments in the current portfolio disinvestment areas, thus conducting to resizing
current portfolio
85
OUTSTANDING CHALLENGES • Set up a formal coordination forum involving the
Control Entity (eg: IGEPE), the relevant government Ministry and other major government stakeholders in order to:
• Consult with stakeholders • Review SOEs policy • Assess SOEs performance
• Review SOE legislation to include aspects related to internationally accepted Corporate Governance Best Practices.
86
OUTSTANDING CHALLENGES
• Board member nomination and remuneration should be based on merit
• A roster of candidates should be established from where IGEPE or Government officials shall source for incumbents
• Full dissemination of Corporate Governance principles to all SOEs
• Review all SOEs articles of association and Corporate Governance Models to abide by the approved Guide
87
OUTSTANDING CHALLENGES
• Pursue research leading to strengthening and segmentation of the SOE sector in order to:
• Design adequate policies for each SOE segment • Assign specific objectives for each segment and
assess results • Enhance the full potential of each SOE segment
in line with its defined objectives
88
Third Meeting of the OECD Network on the Governance of SOEs in Southern Africa.
8-9th October 2012 Midrand, JHB
South Africa
Presenter: I Murangi
Director SOEGC, Namibia
Introduction/background
Size of the country
Composition and size of the SOE sector
SOE reforms in Namibia Overall (legislative reform)
Remunerative reform
Three top SOE Governance Challenges
How national SOE reform fits within a wider regional integration process
Independence: 21 March 1990
Population: 2 100 000 people (Census 2011)
Unemployment rate: 51.2%
Total geographical area: 824,292 sq km
Natural resources: diamonds, copper, uranium, gold, silver, lead, tin, lithium, cadmium, tungsten, zinc, salt, hydropower, fish, etc.
Exports-commodities: diamonds, copper, gold, zinc, lead, uranium; cattle and beef, processed fish, karakul skins
52 SOEs are listed in the SOE Act since 2006.
16 are SOCs.
Currently the number of SOEs has increased to approximately ninety (90) SOEs.
Categories: regulators, service rendering and economic and productive SOEs.
Centralized Model. The SOEGC has an oversight function on all these SOEs. Direct supervision is with the line/portfolio Minister
SOEs are further classified into three (3) tiers, for the purpose of remuneration of CEOs and senior managers as well as board of directors, etc.
Objectives Assess the strength and
weaknesses of SOE governance in Namibia
Review best international practice in SOE governance
Formulate a policy framework for the future governance of SOE in Namibia
Develop an implementation framework to ensure effective and continuous compliance with and development of the policy
Areas covered Significance of the SOE
sector Performance of SOEs Legislative Framework Transparency to and
communication with external stakeholders
Ownership representation Remuneration Board practices Performance management Private sector participation
Recommendations Board of Directors
Executive Management
Performance management
Financial accountability
Tariff policy
Stakeholder involvement
Ensuring governance policy compliance
Regulatory framework
Increased private sector participation and the promotion of competitive environment
Implementation framework
Mandating of the policy framework
Establishment of the SOEGC
Establishment of the associate structures
Recruitment of the Director
Preparation of work programme and budget
Procurement of implementation resource
Ongoing communication
To provide the Namibian SOEs a clear framework to comply with and to enable them to pursue best practice standard
To remunerate SOE’s senior managers fairly and sustainably
Transparency and Disclosure
Shareholders to approve salaries
Three (3) tiers Criterion used:
Total assets
Total revenue
Total primary employment
100
Tiers Economic and Productive
Regulators Service rendering
Tier 3
Tier 2
Tier 1
Remuneration: CEO
Bands for Total Guaranteed Pay ( TGP)
Size of SOE Lower quartile Median Upper Quartile
90th percentile
T3 Xxxx
xxxx xxxx xxxx
T2 xxxx
xxxx
xxxx
xxxx
T1 xxxx
xxxx
xxxx
xxxx
Board of Directors
Audit committee Other sub- committee
NE Chair NE Dir NE Chair NE Dir NE Chair NE Dir
Annual/Retainer fee
LQ
Median
UQ
Sitting allowances p/a(assuming four meetings p/a)
LQ
Median
UQ
Governance Model (central vs. dual) • Preferred/recommended model awaits endorsement
Structure • Too small
• Not yet approved
• Failure to attract requisite skills
• Failure to retain skills and experienced cadres
Compliance • Lack of corporate guidelines
• Small staff establishment
• Huge SOE sector
Regional
• Unofficially adoption of King 3
Regional
•Adoption of regional best practices
Regional
•Outward and inward Regional Benchmark visits
CONFIDENTIAL
CONFIDENTIAL
Overview of the current reform process
Ms Orcilla Ruthnam
CD: Governance Department Public Enterprises
106
3rd Meeting of the OECD Network on the Governance of State Owned Enterprises in
Southern Africa
8-9 October 2012 DBSA
Table of Contents
• The evolution of DPE
• Current Regulatory Regime
• The Role of State Owned Companies in general and
within the DPE Portfolio
• Shareholder management and oversight (rationale and
tools)
• Governance challenges and successes
CONFIDENTIAL 107
Government is going through a fundamental review of the role that State
Owned Companies (SOC) should play in the South African economy.
• 1994 – 1998: Established as the office of privatisation focused on disposal of SOC (with the
intrinsic assumption that SOC had intrinsically negative development impacts.)
• 1998 – 2003: Emphasise shifts to restructuring of SOC with focus on equity partnerships,
initial public offerings and concessioning of specific assets to optimise shareholder value
and economic efficiency.
• 2003 - 2010: Develop the SOC as focused sustainable state owned business entities
delivering on a specific strategic economic mandate.
• 2010 - : Instrument of a Developmental State – but how?
Restructuring/
privatisation
2003 Current
Consolidation of core
services
Instrument of
Developmental State?
These changes have happened in a policy vacuum regarding the role
of SOC in driving developmental objectives.
108
EVOLUTION OF DPE
109
FROM FRAGMENTED TO PORTFOLIO APPROACH
Office established in 1994 to champion privatisation of SOC
In 1999 – first shift and Government mandate shifted to building the SOC
In 2004 - real shift in developing shareholder compacts and DPE strategy changed to direct its SOC portfolio to focus on the consolidation of core services and disposal of non-core assets and operations
Overarching objective : direct SOC to align strategy with the needs and policy direction of the domestic economy, namely:
* Positioning or entry of SOC in pursuit of industry or sectoral policies
* The development and promotion of policies by the DPE that enhance the operation of SOC
CONFIDENTIAL 110
Director-General
Public Enterprises
Minister
Public Enterprises
DDG
Legal & Governance
DDG
Energy & Broadband
Enterprises
Head
Corporate Services
Chief
Financial Officer
(CFO)
DPE HIGH LEVEL ORGANISATIONAL STRUCTURE
DDG
Transport
Enterprises
DDG
Economic Impact
and Policy Align
DDG
Strategic
Partnership
DDG
Manufacturing
Enterprises
Head
Communications
DDG
Chief Operating Officer
Special Advisor
Deputy Minister
Public Enterprises
Chief Audit Executive
Special Advisor
SOC Regulatory Regime
SOC
enabling
Legislation
Companies Act
• Memorandum and
Articles of Association
/ MOI
Public Finance
Management Act,1 of
1999
* Treasury Regulations
* Shareholders Compact
* Significance and
Materiality Framework
* Corporate Plan
Sector legislation and
policies (e.g. Electricity Act,
Electronic Communications
Act)
Public Audit Act ,
Auditing Profession
Act, IRBA (code of
professional Conduct
of Registered
Auditors)
Other general
legislation, guidelines
and policies (e.g. tax,
labour, environmental
laws)
* Responsible Corporate
citizen
111 - Confidential -
112
Why a Government Shareholder Management Model?
To recognise the value of the State’s shareholding and to optimise
such shareholding to achieve long range strategic interventions to
leverage key outcomes
To enhance Government’s capacity as shareholder of strategic state
owned enterprises and induce consistent and harmonised shareholder
management and state owned enterprise corporate governance
practices
To provide a predictable and transparent framework of performance
accountability in respect of the economic value of its investment in
state owned enterprises
113
• Increasing the rate of investment in fixed assets (particularly infrastructure
capacity), technologies and skills to support the growth process.
• Enhancing the competitiveness of the economy through better infrastructure
services, managing the value of the currency and skills upgrading.
• Encouraging labour intensive and green activities.
• Leveraging public procurement to develop manufacturing.
• Promoting social compacts around development objectives.
Performance
Evaluation
Framework
There are a number of policies that define our national economic development priorities.
The New Growth
Path
Industrial Policy
Action Plan
115
The DPE’s mission is to ensure that the SOC are both financially sustainable and deliver on government’s developmental objectives
To optimize the alignment between the role of the SOC in the national economic
strategy and the performance of the DPE’s portfolio of enterprises through delivering
best practice shareholder management services and engaging with stakeholders to
create an enabling environment for such alignment.
DPE
National Interest Enterprise Interest
The Shareholder has Specific Powers and Responsibilities in the SOC Governance System
Management
Shareholder Executive Authority
Board Accounting Authority
Companies
Act & PFMA
establishes
relationship
Management Agreement
Board cascades delegations and
performance expectations down to
management
Shareholder Management
Defines powers and responsibilities of
shareholder vis a vis the Board and
Management
Presidency
Performance of Minister of
Public Enterprises
Parliament
Transparency and
accountability
- Confidential - 116
Shareholder Expectations and Governance Framework: Contents
• SOC stakeholder/accountability structure
• DPE Statutory mandate for SOC Oversight
• PFMA & National Treasury Regulations
• Company Law
DPE
GOVERNANCE
TOOLS
Quarterly reports and Annual Financial Statements
Significance and materiality Framework
Board appointments and remuneration
Corporate Plan
Strategic Intent Statement
Transaction guidelines and section 54 Approvals
Board performance evaluations and attendance
Shareholder compact
Investor Brief Annual General Meetings
117
STRATEGIC SOC OVERSIGHT: LOGICAL PLANNING, MONITORING & EVALUATION PROCESS
Intra-governmental consultations
Consultations with sector depts, NT and Presidency (NPC and M&E) on SOC strategy alignment to MTSF
Quarterly
SOC Corporate Plan
PFMA Sec 52
Strategic Intent
Statement
Shareholder Compact
TR 29.2
Performance Monitoring
TR 29.3
-Quarterly Reports
- Dashboard
- Quarterly & annual Investor Briefs
SOC AGMs & Reporting to Parliament PFMA Sec 65
Confidential 118
119
The following provides an illustration of this approach in
regard to Transnet’s strategic mandate and Strategic Intent
Strategic Mandate
Transnet’s key role is to assist in lowering the cost of doing business in South
Africa, enabling economic growth and security of supply through providing
appropriate ports, rail and pipeline infrastructure as well as operations in a cost
effective and efficient manner within acceptable benchmark standards
Example of Objectives in Strategic Intent
• Reduce the total cost of logistics as a percentage of transportable GDP;
• Accelerate modal shift by maximising the role of rail in the national transport
task
• Accelerate investment to provide rail, port and pipeline capacity to support
growth
• Enhance operational efficiencies against international benchmarks
The DPE has also developed an electronic dashboard to
systematise reporting & analysis
Isibuko dashboard developed to allow for timely reporting & enable rapid access to
information in key areas including financial, operational, capital investment,
capitalisation, intra-governmental policy, socio-economic, risk etc
Ensures clear, comprehensive & timely SOC performance reporting & monitoring that
provides adequate information to make key strategic decisions
• SOC inputs key performance data required by DPE for monitoring process.
• SOC validates & approves submitted data.
• DPE adds analysis & reports on SOC performance.
• SOC & Portfolio Performance is available via the Dashboard.
120
121
The DPE has also developed an electronic dashboard
(Isibuko) to systematise reporting & analysis
•“One version of the truth”
• Key performance data captured from source documentation.
• Data is validated and approved before being presented.
• Shorten the waiting time for obtaining key performance data.
• SOC Performance monitoring database – retain historic data, to use for
trending.
• Automatic notification on change of data and due submission tasks.
• Aggregation of standard key performance data across SOC into the DPE
portfolio.
122
A procurement policy to entrench supplier development in
each transaction has been developed
Organisation Process
Governanc
e &
controls
People/Change Management
CSDP
Strategy
Other
Policies Procure-
ment Policy Procurement
Policy 2
1
Systems
3 4 5 6
7
Inte
rnal develo
pm
ent
fram
ew
ork
• Integrate supplier development concerns in all procurements.
• The development of the strategic plan is the tip of the iceberg – now need to embed the process in the organisation.
• Implicitly encouraging best-practice procurement as demand forecasting is the key to supplier development.
• Top management continue to focus on the major procurements
Comments
123
Oversees implementation of internal SOC skills development:
Ensure SOC participates in initiatives to support National Skills Development Agenda.
Ensure scarce and critical skills defined in shareholder compacts and monitored on
dashboard.
Ensure increased skills collaboration across DPE SOC.
Promote and coordinate optimal utilization of SOC training facilities to contribute to
additional artisan training for national pool.
Solicit funding from DHET/NSF and SETAs to fund training of additional artisan trainees for
national pool.
Monitors SOC supplier network skills development related to infrastructure
investment programmes and maintenance programmes through dashboard.
Facilitates partnerships with SOC, DHET, SETAs, NBI, FET Colleges and relevant
stakeholders to collaborate on initiatives to maximise and support artisan training to
increase the national pool of artisans.
The DPE has established a unit to manage skills development
125 • :
• the following, amongst others:
The DPE has developed a comprehensive Board Induction
programme
knowledge, skills and understanding of SOC’s ;
government ownership expectations;
Assist directors’ meaningful contribution to effective stewardship and successful performance of SOC
The specialist nature and complexity of SOCs;
The challenges of SOC risks and ensuring performance and delivery;
The unique nature of the SOCs shareholder, policy and administrative relationships;
The specific public sector regulatory environment, Public Finance Management Act (PFMA), Treasury Regulations, etc.
The exposure associated with demanding fiduciary duties, legal and regulatory requirements, liability of Directors, best practice governance and business requirements, etc.
The ability of experienced Directors to contribute to the knowledge and development of inexperienced Directors through their interaction;
EQUIPS SOC
BOARD OF
DIRECTORS
WITH :
DPE
DEVELOPED A
TOOLKIT
WHICH
ADDRESSES:
126
Managing remuneration is an extremely complex and
contentious issue!!!
• SOC are both commercial and part of the state – this creates a tension
– Some argue that remuneration should be linked to public service pay
scales.
– Others argue that the pay of executives must be capped for a reasonable
period until the gap between lower income earners and executives is
narrowed.
– The SOC themselves argue that to compete with the private sector for
skills requires we benchmark against the private sector.
– We are searching for a pragmatic, scientific methodology that will
encompass the dual nature of the SOC.
• Key issue in the short term is to ensure that incentives are linked to
performance against compact targets, rather than narrow financial
considerations.
• There are serious concerns around long term rolling incentives for executive
directors, the payments of which lead to a bloated remuneration packages (3
times fixed pay)
• We are presently comprehensively reviewing our remuneration policy – it
is an area for dialogue between state shareholder managers.
Governance challenges
• Audit outcomes reveal that SOC continue to experience
challenges such as financial mismanagement and non-
compliance with legislation –
Transgression of internal SOC policies & procedures
Qualified audits (lack of internal controls, inadequate information
provided to auditors, fruitless and wasteful expenditure, late
submission of information);
Recurring Supply Chain Management audit findings;
Information asymmetry of impending or emerging risk and
commercially sensitive information; and
Managing reputational risks
CONFIDENTIAL
127
DPE Oversight Experience
Clarity of shareholder and
stakeholder role and purpose
Aggregated portfolio view
Consolidated performance monitoring and
oversight of 8 entities
Formalising and structuring Board
management
Achieved consistency and rational
oversight
Stronger SOC balance sheets
Focused SOC business operations and
management
Successes
Asserting shareholder rights
and objectives
Uniform reporting and governance
frameworks
Duplicative statutory obligations and
regulation
Statutory gaps on planning and
reporting content
Optimal performance with positive
impact on the economy
Strong balance sheets and
consequent reduced reliance on fiscus
Clear mandates
Challenges
Anticipation of the outcomes and implementation of the recommendations of
the Presidential SOC Review Committee on SOC governance reforms
128
Reforms In State Owned
Enterprises in Swaziland
8-9 October 2012
VP Nxumalo
Director, Public Enterprises Unit
Ministry of Finance
Swaziland
131
Brief Background
• Since achieving independence in 1968
Government has established SOE in 12
different sectors of the economy.
• This has been mainly because the private
sector has not developed enough or there
is not much interest.
132
Sectors covered by SOE
• Agricultural Development (5)
• Business Promotion (7)
• Financial Institutions (4)
• Health Institutions (3)
• Housing Institutions (1)
• Information (1)
133
Sectors covered by SOE
• Public Utilities (3)
• Tourism and Environment (5)
• Transportation (4)
• Education and Training (2)
• Sports and Culture (2)
• Youth Affairs (1)
134
Size of the Sector
• 40 State Owned Enterprises
• Assets worth E9.8 billion in 2011.
• 17 self sustaining
• 23 Government funded.
• There are 16 other businesses where
Government has minor shareholding.
136
Size of the Sector
• Account for 7% of formal sector
employment.
• Account for 22% of public sector
employment.
• Contribute 8% to GDP
• Average ROCE was 3.3% in 2011.
• Gearing averaged 43% in 2011
137
Major Services Provided by SOE
• The SOE provide most of the national
infrastructure and services:
– Water
– Electricity
– Telecommunications
– Railways
– Tertiary Education
138
Governance of SOE
• SOE are distributed within 12 out of 20
different line Ministries.
• Ministers with SOE under their portfolio
are politically responsible for them.
• Boards of SOE report to their line
Ministers.
139
Governance of SOE
• SOE were created by different legal
instruments - mainly Acts of Parliament.
• Government, as the 100% Shareholder,
wanted to have oversight, control and to
monitor the SOE sector.
140
Governance of SOE
• An Act of Parliament - The Public
Enterprises (Control & Monitoring) Act of
1989 was enacted.
• The Act establishes a sound operational
framework for corporate governance of
SOE.
141
Governance of SOE
• The Act establishes a Unit within the Ministry of Finance – The Public Enterprises Unit (PEU).
• The PEU basically monitors the performance of SOE and provides technical advise, to line Ministers and Cabinet, on the operations and policy management of the SOE.
142
Governance of SOE
Appointment of Board members
• Line Minister in consultation with Cabinet
• Term is normally 3 years.
• Members get retainer and sitting fees.
• Fees are regulated by Cabinet on the
advise of PEU
• Can not sit on more than 2 Boards at a
time.
143
Governance of SOE
Appointment of Board members
• Don’t terminate all at the same time.
• Balance of skills – a challenge
• Four meetings per year- a challenge
• Payment of fees – a challenge
• Government officials on Boards - a
challenge
144
Governance of SOE
Appointment of Chief Executive Officer and Chief Financial Officer
• Board nominates and line Minister appoints in consultation with Cabinet
• 3 year contracts renewable upon Boards recommendation
• Pay packages negotiated with Board, Line Minister with Cabinet approves
• Pay packages now regulated by Cabinet
145
Governance of SOE
SOE should provide information to PEU
and Line Ministry
• Quarterly Reports
• Annual audited accounts
• Corporate Plans
• Strategic Plans
• Budgets
146
Governance of SOE
Appointment of Independent External
Auditors
• Nominated by the Board and approved by
line Minister with Cabinet
147
Governance of SOE
Major policy decisions approved by Line Minister with Cabinet
• Adjustment to level and structure of tariffs, prices for non-regulated sector
• Investments disinvestments
• Expansion of operations
• Review of level or structure of staff salaries and wages and conditions of service
148
Governance of SOE
Government oversight
• Cabinet receives from the PEU a
consolidated report, with technical advise,
on the quarterly performance of all SOE
• Cabinet receives annual audited accounts
of each SOE.
149
Governance of SOE
Parliamentary Oversight
• Parliament receives the consolidated
quarterly report, with advice from PEU, on
the performance of SOE.
• Parliament receives annual audited
accounts of each SOE.
150
Governance of SOE
Disciplinary Tribunal
• A Disciplinary Tribunal seats over any case of
violation of the PE Act.
• Tribunal comprises
– Chairman – Member of either House of Parliament
– Two other members of either House of Parliament
– Two other persons
– Auditor General
– Official from Ministry of Finance
151
Reforms in the SOE Sector
• Reforms started in the late 1990s
• Government embarked on a reform policy in 1998 called the Government’s Economic and Social Reform Agenda (ESRA).
• ESRA called for a major statement on the reform of the SOE sector.
152
Reforms in the SOE Sector
• The statement called for the privatization
of some of the services that were being
provided by SOE.
• Government through the Ministry of
Finance establish a privatization policy to
complement the policy statement of 1998.
153
Reforms in the SOE Sector
• Privatization policy was approved in 2004
after wide ranging consultations with key
stakeholders.
154
Reforms in the SOE Sector
• Government called for the formulation of a
Privatization Roadmap
• Business strategies were formulated for
each SOE.
155
Reforms in the SOE Sector
• Need of each SOE for regulation was
considered.
• Need for Restructuring was considered.
• Benefits that might be gained from
privatization were considered.
156
Achieved Reforms so far
• An independent energy regulator -SERA
was set up in 2010.
• Bill seeking establishment of
Telecommunications regulator is now in
Parliament.
• A regulatory authority for civil aviation –
SWACCA was set up in 2010
157
Achieved Reforms so far
• A regulatory authority for quality standards and
measures – SWASA, was set up in 2009.
• Act establishing the 100% owned electricity
provider - SEC was amended setting it up as a
company instead of being a Board as previously
was.
• This was meant to make it ready for investors to
come in when Government is ready
158
Achieved Reforms so far
• In 2008 Government approved that the
100% State Owned Bank – Swazibank,
can have a strategic partner. That process
is still on-going.
• In 2011 the Swaziland Revenue Authority
was set up to ensure efficient collection of
Government revenue.
159
Achieved Reforms so far
• The Swaziland Competitions Commission
was set up in 2009 to regulate
competition.
• One of the two 100% owned hotels-
Shiselweni Hotel and Casino was sold to a
private operator.
160
Achieved Reforms so far
• Some operations of the 100% owned
railways enterprise were out-sourced.
• A Bill seeking to convert the Government
Department- Central Transport
Administration (CTA) to a fully fledged
SOE is in Parliament.
161
Achieved Reforms so far
• The existing Public Finance Management Act is being amended to ensure proper control, management, transparency, and accountability by all entities including SOE that receive funding from Government.
• A draft Bill seeking to repeal the PEU Act in order to establish a Public Enterprises Agency has been discussed by Government and sent for further drafting.
162
Governance Challenges
• Misunderstanding of the authority that
Government has over the affairs of SOE.
• SOE sometimes feel that Government
should not exercise control on some
operational issues while Government feels
otherwise.
163
Governance Challenges
• When Government tries to put in place
certain policy measures on SOE, some
take that as interference.
• Some times Government takes time to
resolve issues relating to SOE.
• Funds shortage for Government leads to
poor performance by subvented SOE.
164
Interventions
• The Ministry of Finance through the PEU introduced a training program on good corporate governance for all SOE Boards of Directors and management.
• The training now needs to be extended to Government.
• Training providers were accredited to conduct the training.
• King III principles adopted.
165
How Reforms fit with Regional
Challenges
• Almost all the reforms so far seem to fit with regional challenges.
• The problem may be the speed at which they are carried out.
• The speed may be slow but we believe the reforms will certainly get us somewhere.
• Any support would be welcome.
166
State Owned Entities
Agriculture
• Swaziland Dairy Board
• Swaziland Maize Corporation
• Swaziland Cotton Board
• National Agricultural Marketing Board
• Swaziland Water and Agricultural
Development Enterprise
167
State Owned Entities
Transport
• Royal Swazi National Airways Corporation
• Swaziland Railways
• Central Transport Administration
• Swaziland Civil Aviation Authority
168
State Owned Entities
Finance
• Swaziland Development and Savings
Bank
• Swaziland Revenue Authority
• Swaziland Development Finance
Corporation
• Motor Vehicle Accidents Fund
169
State Owned Entities
Utilities
• Swaziland Electricity Company
• Swaziland Posts & Telecommunications
Corporation
• Swaziland Water Services Corporation
170
State Owned Entities
• Business Promotion
• National Industrial Development Corporation of Swaziland
• Small Enterprises Development Company
• Commercial Board
• Swaziland Competition Commission
• Swaziland Investment Promotion Authority
• Swaziland Standards Authority
• Swaziland Youth Enterprise Fund
171
State Owned Entities
Education & Training
• University of Swaziland
• Sebenta National Institute
172
State Owned Entities
Tourism and Environment
• Piggs Peak Hotel and Casino
• Swaziland National Trust Commission
• Swaziland Tourism Authority
• Swaziland Tourism Development
Company
• Swaziland Environment Authority
173
State Owned Entities
Information
• Swaziland Television Authority
Housing
• Swaziland National Housing Board
Labor
• Commission for Mediation Arbitration and Conciliation
174
State Owned Entities
Health
• National Emergency Committee on
HIV/AIDS
• Swaziland Nazarene Health Institutions
• Good Shepherd Hospital
175
State Owned Entities
Sports
• Swaziland National Sports Council
Culture
• Swaziland National Council of Arts and Culture
Youth Affairs
• Swaziland National Youth Council
SOEs in Zimbabwe
Contribute upwards of 40% of GDP;
Enablers to economic development;
Spearhead economic recovery and development;
Ensure food security;
Infrastructure rehabilitation.
Major SOEs Challenges
Undercapitalization;
Huge debt overhang;
Deterioration of infrastructure;
Limited access to lines and credit;
Sanctions;
Inadequacies in Corporate Governance.
Energy Regulatory Framework
To encourage private sector participation in power generation;
Zimbabwe Energy Authority in place;
Zimbabwe Electricity Supply Authority corporatized and unbundled into separate business units;
National Oil Company unbundled into two business units, one for trading business and the other for infrastructure provision.
Other Sectorial Regulatory Reforms
Telecommunication Sector opened up for competition with a Regulator;
Consultations in progress to restructure National Railways of Zimbabwe to separate regulatory functions from other functions;
Restructuring in progress to separate regulatory functions from other functions.
Other reform Strategies
Promotion of good corporate governance practices;
Improvement of performance Management System;
Improvement of legislative provisions;
Codification of corporate governance principles.
Governance challenges
Separation of ownership function and other government functions;
Approval process for budgets, plans and procurement;
Performance management system.
Separations of Ownership function
Corporate governance framework advocates for separation of ownership from regulatory and policy formulation;
Conflict in approval process for example tariffs.
Outcomes of conflicted approvals
Under-capitalised state enterprises;
Poor service delivery;
Pressure on the fiscus;
Service demand greater than supply;
Outside assistance required.
Budget approval process
Involves institutional outside the control of the Board in term of statutes;
Private sector resolutions passed at AGMs or extraordinary AGMs;
AGMs minimises risks associated with delays.
Procurement Process
Involves institutions outside control of the board in terms of statutes;
Delays the process of procurement;
Increases exposure to competition;
Need for efficient, transparent, fair and documented procurement procedures.