Peculiarities of state- owned enterprises ( soes) governance and leadership: part 14.

In the last article, we asked questions, who is suitable to appoint members of the State- Owned Enterprises ( SOEs) Governing Bodies ( GBs). We then suggested that since the members of Cabinet who approve the appointments of GBs are preoccupied with other pressing issues, an independent agency should be contracted or capacitate Public Enterprises, Evaluation and Privatisation Agency ( PEEPA) to continue recruiting and managing SOEs directors or by the Government to execute the assignment to appoint and manage process of appointing SOEs GBs. We added that in the event the status quo remains, appointments should be made on merit to safeguard the national assets sustainability of SOEs. In this week’s article, we will continue with the issues raised in last week’s article.

Coming back to the issue of preoccupation with other assignments and lack of corporate stewardship interest of some civil servants appointed to serve in SOEs GBs, their numbers in these positions should be reduced to safeguard state assets and sustainability of SOEs. This should not be construed to mean, civil servants appointed to SOEs GBs participate in the mismanagement of SOEs. We are rather saying, due to some of them lacking competencies, corporate stewardship experiences and their obsession with their regular public service assignments, in most cases, they become bystanders watching mismanagement of SOEs finances and other assets. However, we must be appreciative of the fact that the Government previously heeded to the concerns of placing Permanent Secretaries ( PSs) in the SOEs GBs some of them being chairpersons of such organisations. I am wondering if the Government reacted to the issue of removing PSs from the Boards of SOEs was because of their, glaringly, overwhelming assignments exacerbated by their roles and duties in SOEs or was just a relenting decision. The issue which I believe, partly, compounded this let go decision was a corporate scandal which pervaded Botswana Housing Corporation ( BHC) in 1992 which attracted a Presidential Commission of Inquiry conducted by Scotland yard Police led by Richard Hunter Christie from the United Kingdom ( UK). According to the findings of the report, the Board was appointed by the Minister who did not even have guidelines to facilitate the process and that the Permanent Secretary was also appointed the Chairperson despite the articulated reservations.

Following are the attributes of the PS ( Aspects of the demands of the position of the chairperson):

he/ she needed sufficiently available time to become immersed in the Corporation’s affairs, not necessarily on a full- time basis but not as a minor job amongst more demanding commitments; the ability to build up and maintain that relationship of teamwork and trust with vigilance between the chairman and chief executive which is the hallmark of all successful organisations; accessibility to staff at all levels without undermining the authority of more senior staff and integrity and acceptance of ultimate responsibility for the affairs of the corporate ( The Presidential Commission of Inquiry on BHC, 1992, cited in Kedisitse, 2007)

Inquiry on BHC ( 1992) further states that “Successive Chairmen and board members who gave evidence left a strong impression on us simply not appreciating the nature of their duties”. The findings also flawed the policy of accountability among the Government, the public and the Board of Directors; in other words, the principal and the agent relations were ineffective.”

As stated earlier, this area of PSs being chairpersons of SOEs was resolved. What is left now is reducing some civil servants from the boards and other ineffective directors. If this is sorted out, then we can assist in other issues to achieve the objective of see our SOEs as they are expected to be.

One other thing that I would like our beloved Government to consider is to introduce a new structure for directors’ remuneration in SOEs to motivate the position holders and induce a spirit of value creation. One cannot create or receive value without firstly contributing to value creation; hence this is a requirement from the Government. My suggestion is that we reconfigure SOEs, reposition their mandates projects their sustainability. Immediately, after that process, directors’ remuneration should be considered. Boards of SOEs should be recognised as corporate Boards, irrespective of their direct financial generation or service generation. The tendency of solely considering contribution of any service in monetary terms is not fair. All SOEs provide valuable service whether they are producing direct service only or monetary contribution. Therefore, SOEs which do produce services but not contributing direct cash to the Government, should compute notional monetary price to their services with a view to matching their return on investment of those that produce cash or monetary income. In the next article, we will discuss any topic of interest relating to any business or organisation irrespective of its status, whether it is in private sector or public sector.