Corporate Governance
In the last article, we discussedthe issues threatening sustainability of State- Owned Entities ( SOEs), such as: duplication of mandates, working in silos SOEs management and employees, suboptimal ways of utilising financial subvention and this pattern being accentuated by the growing interest in social companies in City/ Town/ District Council claiming to be raising financial income for the councils. In this week’s article, we will discuss the issues on how members of boards of SOEs are appointed and the next question being who appoints them.
If my memory serves me right, the Public Enterprises Evaluation and Privatisation Agency’s ( PEEPA) aspects of its mandate was to evaluate SOEs together with their prospective directors with a view to checking which ones are ready to be privatised ( Or which ones to be improved while still remaining SOEs). In addition, the Agency’s other aspect of the mandate was to coordinate the recruitment of SOEs directors, recommend for their placement in their respective organisations, further train them and arrange for their assessment when the due time arrives. Whether PEEPA was carrying out these services or outsourcing them that seemed to be a good arrangement because it enjoyed the benefits of uniformity and universality. PEEPA also used to keep interviewed directors’ data base for future prospecive directors’ requirements for other SOEs to reduce costs on advertising in the event of the ensuing recruitment.
I also understand that PEEPA’s main function would be to make assessments of directors and send the recommended names for consideration for the recruitment to the line Ministry of the SOE which will be subsequently considered by the Cabinet for appointments. The question then is, is PEEPA still carrying out this recruitment, induction, training, and evaluation of SOEs directors ( Or members of Governing Bodies) 100 percent? If not, who now does that? One other question is, despite having a good arrangement with PEEPA to offer these services, has the company been offering desired services? These questions are triggered by the way some SOEs perform poorly; do they have ethical and effective board stewards in the form of directors? Is there interference in the appointments?
In my opinion, it would be tidier to remove the appointment of SOEs boards from the approval of Cabinet to be fully completed by an independent agency for the purposes of thorough coverage of national boardroom skills and experiences. Politicians eyes do not help the situation in many cases because they are preoccupied with other pressing issues. How amazing does joining the Cabinet change people who for a long time prior to their elections have been promising to make reforms in the system. Several Ministers come from private sector and therefore they should be advocates for inclusive approach of running national issues. I doubt if they fully trust people from private sector. My advice is that consideration should be made indiscriminately to all citizens in appointments to the SOEs boards in disregard to other divisive issues. If there is one of the opportunities for grooming Batswana for corporate world, it is appointment to SOEs boards; however, preferably, this being done at an arm’s length with all that it takes to be a director.
I am not concerned with the Minister appointing the board since he represents the Government who is, usually, the sole owner of the SOEs. In fact, in my article dated 06 September 2019 in the same paper titled: ‘ HOW DOES LEGISLATION BECOME AN IMPEDIMENT? PART 2, I had this to say, “I venture to say that the appointment to SOE Board should be done on merit, on the basis of mixed skills, competencies and experiences. However, one should bear in mind that Government is the owner of SOEs. Let me give the analogy of an entrepreneur starting a company; will he go and ask people, to come and appoint directors of that company for him/ her? I expect the answer to be an emphatic no, right!”