... no dividends declaration from FSRA, Swazi Fruit Canners

MBA BAN E–Even though it is operating at full strength and realises potential, the Financial Services Regulatory Authority (FSRA) has been listed as one of the public enterprises that do not declare or pay dividends.

This was said by the Auditor General Timothy Matsebula in his financial audit report, which was tabled during the budget speech last Monday.

The AG said he noted that the FSRA, which operated in the regulatory and developmental category, was not declaring and paying dividends or special dividends to government, even though it was operating at full strength and realising profits.

Matsebula mentioned that total profits realised by the FSRA over a five-year period amounted to E41 359 718.

“Even though discretion for declaring dividends was left to the Board, the policy emphasises that those entities operating at full strength and realising significant profits have to pay dividends or special dividend,” Matsebula said.

He mentioned that he explained to the controlling officer that the profits realised by the enterprise over the years were as a result of government capital injections.

He said the taxpayers’ funds were invested in the parastatal, hence a return on investment in the form of dividends was expected as a flow of funds back to the investor.

Elaborating, the AG said he drew the attention of the controlling officer to Section 14 of the Dividend Policy, which stipulates that while regulatory authorities were not expected to pay dividends in the medium term when still new and at infancy stage, those operating at full strength had to pay dividends or special dividend at the discretion of their Boards.

UNREALISED RETURNS

“I am discontent with the unrealised returns on investments which has compromised revenue collections and worsened the livelihood of citizens. I advised the controlling officer to encourage the Board of the authority to pay dividends or special dividend from their accumulated profits and /or capital reserves and make recommendations to the minister for Finance for the direction of the Board to pay dividends or special dividend,” said Matsebula.

On another note, the AG also raised concern about yet another company which he said had not done things right in terms of declaration of dividends to government.

The company, Swazican Fruit Canners, is classified by the AG as a Category B entity that has not submitted dividends to government for a seven-year period.

According to Matsebula, the company has been declaring zero dividends from the year 2016 to 2023.

He said government’s investment was five per cent shareholding, which is equivalent to 600 348 shares.

INVESTING OBJECTIVE

“The non-declaration of dividends is contrary to government’s investing objective of generating equity income, and might further pose a possibility of zero growth in the investment value (share value) in this company,” said Matsebula.

He highlighted that the current status of the performance of Swazican Fruit Canners was not ascertained.

However, he emphasised that according to Section 17 of the Dividend Policy, Category B public enterprises should continue to pay dividends to government as declared by their Board of directors from time-to-time. Also, he made reference to Section 105(2) of the Public Finance Management Act, saying it required the minister of Finance and line ministers of public enterprises to exercise their rights as shareholders in the best interests of the government and the citizens of the country.