Experts call for removal of underperforming CEOs, boards at public entities

Former presidential economic adviser and incoming chief executive officer (CEO) of the Development Bank of Namibia, John Steytler, has called for the immediate removal of underperforming chief executive officers and board members from state-owned enterprises.

As the country’s key investor, Steytler said the government should have taken a more active role in ensuring the success of these commercial entities. Instead, it appears the government has been content to remain disengaged, leading to a lack of clear expectations for the managers running these crucial public assets, Steytler said.

“The shareholder has been absent. If I put my money in a business, I will make sure that business succeeds. I will watch that business, I will appoint the most competent CEO and the most competent board. If that CEO doesn’t perform, I will boot the CEO, I will boot the board,” Steytler said.

Steytler was speaking during a Fireplace Discussion organised by the the Namibia Institute of Corporate Governance Thursday evening.

Currently, commercial state entities including Meatco, the Namibia Broadcasting Corporation (NBC), and TransNamib are grappling with financial difficulties that have necessitated heavy reliance on government bailouts to stay afloat.

The dire situation faced by these entities is evident in the recent liquidation of the national airline, Air Namibia, after years of dependence on government assistance.

Steytler said it is entirely feasible for a state-owned entity (SOE), even with 100% ownership, to flourish like private companies.
However, he emphasised that proper governance is a prerequisite for such success.

According to Steytler, SOEs have the potential to be effectively governed, but certain measures must be implemented.

“I think SOEs can also be governed properly. But, first you need to do a few things; you need to have a competent board, competent CEO, competent management and you need to have a shareholder that is not absent, but also not controlling,” Steytler said.

According to economic analyst Salomo Hei, there exists a significant responsibility on the government to safeguard the survival of commercial state entities, ensuring their long-term sustainability.

“Money is not the solution, there is a greater responsibility on governance. There is a greater responsibility on making sure that we get the right people that have the right capability and the right experience and have operated on a certain level to drive the strategic direction of SOEs,” Hei said.

Among the struggling SOEs, Meatco, the state meat enterprise, is particularly facing an uphill battle to remain viable.

The company is encountering numerous challenges that threaten its survival, leading to its ongoing reliance on bailouts to sustain its operations.

According to the most recent report from the auditor general, state broadcaster NBC is projected to depend on government subsidies to sustain its operations in the future.

The company’s financial situation is critical, with accumulated losses reaching N$1,6 billion at the close of the 2019/2020 fiscal year.

Similarly, national railway operator TransNamib has encountered significant hurdles, with reports in The Namibian in August of the preceding year indicating that the company incurred daily losses of N$10 million.

As demands for the privatisation of these entities intensify in the interest of securing their survival, Hei argues that this approach does not always yield the desired results. Instead, he advocates for exploring public-private partnerships as a more effective alternative.

“Where there is a need to leverage skills between the private and public sector, you do that. Where you need to strengthen the public sector using benchmarks that have worked, one should not be shy to do that. Taking the easy way out, which we think is privatisation, doesn’t always work,” Hei said.