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Merge Public Enterprises for efficiency

Publishing Date : 04 July, 2018

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There is a compelling reason to merge some of the public enterprises in order to achieve efficiency and also to reduce government’s budget towards these parastatals.

There have calls from various quarters for legislatures to consider bringing these institutions together because their mandates were overlapping or duplicating one another. It is difficult to separate the mandates of these institutions. Most of them, if not all were created by parliament, something which begs the question of why the existing institution(s) were not  given new mandates, with improved budget instead of creating new but institutions with also similar mandates.

This debate has been held before, and has seen various institutions being merged and renamed. There are quite a number of them including Botswana Export Development Agency (BEDIA) which was merged with IFSC to create Botswana Investment Trade Centre (BITC).
The downside of what we are advocating for is that the decision may result job losses, but the good side of it is that it may have a greater impact in the economy. Government will be able to achieve certain objectives on a lesser budget.

Parliament was made aware earlier this year that in the 2017/18 financial year Ministry of Investment, Trade and Industry channelled over P753 million to its nine parastatals which include CEDA, BITC and Local Enterprise Authority (LEA) amongst others. Currently Botswana does not have a home grown commercial bank, despite these resources that public enterprises have at their disposal, there is a need to create a home grown commercial bank.  With this bank in place, then we can see how it can be able to afford to have custom made funding options available to the citizens, at the same time making the institution commercial sustainable.

Merging of these institutions in an effort to achieve efficiency should also be followed by close monitoring mechanism with little political interference. There are many things which government is getting wrong at these parastatals and it is not by mistake that some of them have been facing financial difficulties.

Among these wrong doing include not appointing competent people to relevant position, nepotism as well as organisations that operates without proper boards of directors for a long time. We have seen that happening at Botswana Tourism Organisation (BTO), which is clearly in contravention of the Act that created the organisation.

Not only that, some key parastatals go for a long period without substantive CEOs something which affect the performance of these parastatals. BITC is a case in point. Throughout its existence, BITC has had a substantive CEO for a time which is surely lesser than the length of its existence. The merging exercise should also be seen as cleansing exercise and deal with the corruption that continues to plague some of these public enterprises. Recent revelation indicates that there is corruption in parastatals from procurement to appointment in key positions. 

With proper mandates and clear objectives, parastatals can be used as a vehicle that drives economic growth. But today as we speak, most parastatals have become a burden to the nation and they had to be bailed out on numerous occasions. There is need to optimise the functions of Funding institutions such as Citizen Entrepreneurial Development Agency (CEDA), Botswana Development Corporation (BDC) and National Development Bank (NDB).  These institutions could partner with other parastatals that do work that complement what they already do.

We are alive to the fact that this will be a process, it will not happen overnight. But it is important that calculated steps are taken so that the country can save money, invest in other worthy ventures that could create more sustainable jobs. Botswana must start being creative about setting up her own industries. Merging some of these parastatals could save government from having to bail out institutions time and again. Privatisation alone is not enough, surely merging or rationalisation could perfectly complement it.



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