ESTVA to seek bailout to settle pension debt
MBABANE – As a result of never ending financial challenges, there are plans to seek a bailout for the Eswatini Television Authority (ETVA).
The bailout, which will be sought from government, is meant to assist in paying monies in respect of pension fund for the television station’s employees.
Based on financial statements of the financial years from 2021 to now, the money owed is believed to have now hit the E20 million mark.
In terms of the law, the maximum allowable current pension contribution to a pension fund is 10 per cent of an employee’s pensionable salary in any year of assessment.
In financial language, a bailout is when government gives financial support to rescue a company that is in financial trouble and possibly at risk for bankruptcy.
The bailout enables the survival of the company.
The plan to request a bailout is contained in the Ministry of Information Communications and Technology (ICT) annual performance report for the financial year ending on March 31, 2023.
Interestingly, three months ago, this publication revealed how government had written off a tax debt for the television station amounting to E113 million.
The decision was reportedly sanctioned by the Ministry of Finance. ESTVA owed the Eswatini Revenue Service (ERS) in Pay-As-You-Earn (PAYE).
DEDUCTING MONEY
In most instances, most parastatals are found guilty of deducting money from salaries from staff to honour the PAYE tax obligations but end up not remitting it.
While this was not ascertained for the ETVA, it was on record that employees were not honouring statutory taxation obligation as the employer was not remitting the money to the ERS.
It is the responsibility of the employer to remit the taxes to ERS in terms of the tax laws.
ERS is under the Ministry of Finance.
Regarding the proposed plan to apply for a bailout for the ETVA, it is highlighted in the ICT annual performance report that this is one of the action plans for the next financial year which begins on April 1.
It is mentioned in the report that the serious current cash flow continue to be a barrier in remitting key statutory payments, in particular the pension fund as well as paying respective suppliers.
While the figure is not stated in the annual performance report, in the past four years, the Auditor General Timothy Matsebula, has given a clue in his Compliance Audit Report.
For example, for the financial year ended March 31, 2021, the AG stated that he had communicated that five per cent of the ESTVA employees was held for pension fund with Alexander Forbes.
The AG highlighted that the television station was supposed to contribute 15 per cent of the same in respect of pension fund.
In his analysis, the AG said it was noted that the entity deducted the pension amounts from the employees but did not remit the total amount to the administrators as expected and the balance at the time had accrued to E17 455 998.95.
PENSION DEDUCTION
For example, in March 2021, it was noted that the total pension deduction stood at E453 290.10 and the remitted figure was E115 930.97 which meant that about E337 359.13 had been unremitted.
The AG highlighted that it was best labour practice for employers to contribute towards pension funds which have been established for employees.
Matsebula said he was concerned that some employees might go on retirement empty handed if the matter remained unresolved, resulting in the television station being perceived as an employer with bad labour practices, which did not consider the wellbeing of its employees’ wellbeing after retirement.
The AG said the management was advised that the issue of pension contributions and their remittance needed to be addressed as a matter of urgency.
He mentioned in the report that the management had stated that, given the gravity of the matter they were going to engage the Board and the ministry.
Also mentioned by the AG was that the controlling officer (ICT principal secretary at the time) had disclosed that funding challenges still served as the stumbling block in the entity’s endeavor to honour its financial obligations.
In his analysis, the response lacked credibility in that the controlling officer had not provided an informed explanation why the pension contributions were not remitted to the pension administrator and the proposed plan of settlement.
Furthermore, the AG decried that the outcome of the Board and the ministry engagement was also not provided, which implied that the matter was not given the attention it deserved.
Meanwhile, besides struggling to remit the pension funds, he report highlights a litany of other challenges one of them being that internal operations are financed through an overdraft facility.
Another challenge cited in the report is an unavailability of resources to grant employees a cost-of-living adjustment (CoLA).
MAJOR CHALLENGE
“The lack of funding for the procurement and production of both local and international content remains a major challenge. As a result, the authority is compelled to broadcast uncompetitive programmes and high frequency of re-runs or repeats,” reads part of the report.
Also cited as a challenge are high vehicle rental costs due to delayed procurement of new vehicles.
“Proper and adequate broadcasting equipment and IT infrastructure is still a major challenge for the authority, which is impacting the quality of our productions and operating efficiency. Office buildings require major renovations and some parts of the building still have asbestos roofing,” it is mentioned in the report.
Besides the request for a bailout, the annual performance report states that there are other initiatives which the television station plans to introduce in the next financial year.
These include procurement of new vehicles to reduce transportation costs, completion of capital projects including the renovation of its building situated at the Hospital Hill and stock upgrade.
Also, the station plans to conduct a ratings review exercise which will provide critical data about viewership and required actions to improve content.
The data, the annual report states, will held the station win more advertising contracts as many of them demand it before they could even consider signing contracts.
Furthermore, the station plans to increase locally produced content to 70 per cent, through an already established committee and partnerships with the Eswatini independent producers and other industry stakeholders.
“This initiative will also focus on increasing advertising revenue by introducing more programmes that are more appealing to viewers and advertisers,” reads part of the annual report.
Another initiative contained in the report is that the station plans to secure a memorandum of understanding (MoU) with the Premier League of Eswatini (PLE) for the live broadcast of at least 12 local soccer matches.
This, it is mentioned in the report, will improve the station’s ratings and also promote the local football league.
The financial challenges faced by the ESTVA, a taxpayer-funded public enterprise, have been increasing over the years.
By the end of December 2022, the television station’s debts amounted to E160.7 million.
SUNDRY CREDITORS
The debts included outstanding statutory remittances and sundry creditors for the authority’s operations.
Financials for ESTVA reveal that it received a subvention of E12.77 million for the quarter beginning from January to March 31, 2023, but the authority ended up getting E6.97 million.
The Ministry of Finance deducted E5.8 million from ESTVA’s subvention and remitted it to ERS for P.A.Y.E for the period of January 2023 to March 31, 2023.
Notably, the public enterprise’s internal income generating streams are TV licences and advertising sales.
The company was able to raise E22.3 million in TV licences and other related incomes while advertising sales and programme sponsorships contributed a sum of E1.4 million.
The Eswatini Television Authority (ESTVA) is a broadcaster established in 1983 through an Act of Parliament. It owns the Eswatini TV.
Before it was established by the Act of Parliament, it was known as the Eswatini Television Broadcasting Corporation (ESTBC).
In terms of the law, the maximum allowable current pension contribution to a pension fund is 10 per cent of an employee’s pensionable salary in any year of assessment.