Government to implement new strategy to enhance governance of SOEs

The Ministry of Finance and Public Enterprises intends to implement what it calls a new game plan aimed at enhancing the effectiveness of State-owned enterprises (SOEs), with a particular focus on boards’ performance.

Minister Iipumbu Shiimi revealed the plan during the public enterprises conference held at Gross Barmen this past week, saying it will include the recruitment of experienced individuals to serve as board members of SOEs and measuring their performance.

He acknowledged that the government, as a shareholder, has been inactive in the management of public enterprises.

‘We have to up our game in terms of board recruitment to ensure that we have experienced people on boards, experienced board chairpersons, people who are really going to make sure that the board is not fighting but is providing leadership and oversight. There is always healthy debate and healthy conflict, but if the conflict is going to destroy the organisation, then there is a lack of leadership there,’ Shiimi said.

The ministry
is also going to strengthen training and development, as well as the evaluation of board members. ‘My experience is that we have never had effective evaluation. I have seen boards evaluate themselves, but they always give each other good scores,’ he said, adding that the renewal of board mandates will be based on their effectiveness.

‘On top of that, we are going to base your performance agreement that we are going to sign with the board members on specific key performance indicators. At the moment, all the agreements that we sign are actually very generic; it’s about confidentiality. But what is your mandate? Because you are there as an institution to deliver on a specific mandate. If you are in the electricity business, you are there to deliver electricity. So are you delivering on that mandate?’ he said.

The minister said that key performance indicators (KPIs) are going to be part of the performance agreements that the ministry is going to sign with the SOE boards.

‘We also want to see the remuneration
of your executives pegged to performance management. It can’t just be that we are going to receive bonuses. These bonuses must be backed up by a clear indication of performance,’ said Shiimi.

The ministry is also going to enforce compliance with the Public Enterprises Governance Act (PEGA) of 2009.

‘We are actually developing a compliance scorecard that is going to measure different requirements of PEGA to ensure that there is compliance,’ the minister said, while pointing to a culture of non-compliance among SOEs.

‘A number of SOEs, if you ask them to give you financial statements, will give you management accounts. Well, those are management accounts. In fact, the law says you need to have audited financials six months after the end of the financial year,’ Shiimi said.

Source: NAMPA