Unveiling the Art of Selecting Board Members for Namibia’s Public Enterprises

In Namibia, there has been significant emphasis on the implementation of corporate governance frameworks, with the belief that they can enhance the performance of public enterprises.

However, little attention has been given to the critical aspect of board member recruitment, often leading to its neglect or underestimation.
The World Bank highlights that implementing effective recruitment procedures can facilitate the appointment of suitable individuals to boards, ultimately leading to improved enterprise performance.

Consequently, the recruitment process should be meticulously governed, similar to any other business process.

Currently, the NamCode and the Public Enterprises Governance Act of 2019 serve as the primary tools for governing public enterprises in Namibia.

Notably, the NamCode encompasses provisions concerning the procedures for board appointments.

As outlined in Principles C2 to C19, a formal process is advocated for the selection of directors. This process entails conducting a meticulous assessment of the qualifications, skills, and experience possessed by potential directors.

Therefore, the NamCode recommends the circulation of concise curriculum vitae for each candidate vying for election or re-election as a director, as part of the notice for the annual general meeting.

Furthermore, the code specifies that, before their appointment or reappointment, the backgrounds of the directors should be scrutinized in accordance with the prescribed approach for listed companies on a licensed exchange.

LACK OF GUIDANCE

However, it is worth noting that the NamCode does not provide a comprehensive, step-by-step recruitment procedure to guide the selection of board members.

Likewise, it does not offer explicit protocols for governing the recruitment processes in question

In contrast, the Public Enterprises Governance Act establishes a legal framework for the appointment of board members.

One of the key provisions outlined in chapter 2 (8)1(a) is the delegation of staff members by the minister of finances and public enterprises to conduct a pre-selection process.

This process involves presenting a report that includes a shortlist of qualified individuals recommended for board positions.

The staff members are required to provide reasons for their recommendations. Essentially, the act outlines a comprehensive recruitment procedure, as demonstrated by chapter 2 (8)1(c), which emphasises the evaluation of candidates’ skills, qualifications and experience.

Furthermore, section (8)2 specifies the necessary background assessments that must be conducted before considering someone for a board appointment.
When examining the contents of section (8), it appears that the legislators who drafted the act took into consideration the collaborative nature of board work.

SKILLS, QUALIFICATIONS NOT ENOUGH

They recognised that simply possessing skills, qualifications and experience is not sufficient for effective board membership. There are other important factors at play during the appointment process that contribute to an individual’s success in serving on a board.

In order to validate the aforementioned perspective, the Belbin theory of team effectiveness offers nine essential attributes team members should possess.

Some examples of these attributes include being an implementer, teamworker, monitor and evaluator.

The theory suggests that for a team to be successful, it is ideal to have a well-rounded mix of all nine characteristics distributed among its members.

Section (8)1(d) of the act can potentially accommodate the application of the Belbin theory, as well as any other future theories that may arise.

It can therefore be argued that if the recruitment process is followed as contemplated in the act, the end result would be the selection of the right calibre of directors.

That is, directors who possess the appropriate knowledge and hold adequate qualifications, skills, abilities, and experience. In addition, these individuals would have the ideal blend of characteristics to work well as part of a team.

Nevertheless, upon conclusion of the shortlisting process, section (8)3 states that the public enterprises minister, after having considered the recruitment report prepared in terms of subsection (1), must forward the report together with his or her advice to the relevant minister under which the board will be constituted.

MINISTER NOT BOUND BY RECOMMENDATIONS

However, in a rather surprising manner, section (8)4 indicates that upon receiving the recommendations and the shortlisted candidates, the relevant minister is not bound by the recommendations.

He or she, in consultation with the Cabinet, can then decide to remove some people or outright reject the whole list.

Section 8(5) states that the relevant minister has the power to appoint people to a board at his or her own discretion after consultations with Cabinet.

This part of the act presents a talking point.

From a governance perspective, a key question emerges: Does section 8(5) uphold and promote good governance in terms of the manner in which people are recruited to boards?

To shed more light on the principles of governance, the United Nations Economic and Social Commission for Asia and the Pacific this year defined good governance as practices that minimise the potential for corruption and favouritism, increase inclusion, and the ability to benefit from diverse thinking and react to the needs of society – both now and in the future

With this in mind, it is then prudent to examine whether section 8(5) minimises the risk of corruption and favouritism.
And whether it increases diverse thinking.
And whether it reacts to the needs of society, both now and in the future.
Whichever way one looks at it, the effectiveness of section 8(5) is a controversial topic.

EASY TARGET

The power bestowed upon relevant ministers presents an easy target of attack – especially when one considers a scenario where the relevant minister singlehandedly has the right to reject results gathered from a meticulous process followed by a group of people over a period of time.

The rationale behind the construction of Section 8(5) remains ambiguous, as the motivations driving its formulation elude precise comprehension.

Plausible conjectures emerge, suggesting that the architects of the act sought to establish a self-regulating framework, contemplating a scenario in which the responsible minister could occasionally encounter inadequately articulated propositions that deviated from the fundamental tenets of sound governance.

With the objective of rectifying such occurrences, the system was deliberately structured to empower the ministers to exercise their prerogative under section 8(5) by dismissing such recommendations.

Numerous enquiries arise from this scenario. In the pursuit of establishing an ethically sound framework that possesses self-correcting capabilities, does the existence of Section 8(5) inadvertently establish a vulnerability susceptible to exploitation?

Moreover, does section 8(5) confer an excessive amount of authority upon the pertinent ministers? In essence, while striving to enact just actions, does section 8(5) eventually engender an excess of virtuous endeavours to the extent that it ultimately positions us on the unfavourable side of things?

The following scenarios give some insights to the challenges experienced so far.

On 16 January 2020, The Namibian published an article that advanced allegations of favouritism during the recruitment of the chief executive officer of the Namibia Institute of Pathology (NIP).

The article alleged that the minister of health and social services, Kalumbi Shangula, was said to be pushing for the appointment of his preferred candidate, Christopher Hikuam, who was based in Cape Town.

According to the article, a psychometric assessment of the candidates was done by an independent company, Atushe Assessment Centre, while the board conducted face-to-face interviews.

The face-to-face interview panel consisted of NIP directors Aina Avafia, Petrina Kapewangolo, Stephen van Rhyn and Fanuel Himeekaurika Tjivau.

The article cites that after the selection process, the NIP board recommended Breuer as the preferred candidate. However, the minister was of a different view and considered Hikuam as the best option.

In a similar story, Windhoek Observer on 11 May 2021 published an article with the headline ‘Favouritism allegations rock Nida CEO appointment’.

The article alleged that the public enterprises minister, Leon Jooste, ignored the board’s decision to appoint Michael Humavindu.

The Namibia Industrial Development Agency (Nida) board, chaired by former Nedbank managing director Lionel Mathews, had recommended the Ministry of Industrialisation and Trade’s deputy executive director, Michael Humavindu, for the job.

However, the minister pushed for the appointment of former African Development Bank (AfDB) executive director Heinrich Mihe Goamab II.

According to the article, some sources allege that Goamab II failed the psychometric test for the post.

The two articles above provoke critical thinking. The main question being: Is it good governance for the minister to go against recommendations that are given after a carefully crafted meticulous process?

SMOKE AND FIRE

Within the realms of traditional wisdom lies the adage “where there is smoke, there is fire,” suggesting that the existence of allegations pertaining to favouritism implies the existence of such practices.

Certain erudite individuals define governance as it appears to external observers, encapsulating the concept of good governance.
Hence, when external parties discern the presence of favouritism and nepotism, it serves as a tangible indication that the essence of good governance is absent.

It is imperative to acknowledge that the law holds an indubitable authority, and it is incumbent upon every individual in Namibia to honour and comply with its provisions.

Notably, section 8(5) remains an integral component of our legal framework, which necessitates our dutiful adherence to it.

Nonetheless, as we move forward, it is anticipated that the discourse on the management of recruitment practices and the ramifications of section 8(5) on optimal recruitment methodologies can engender thoughtful deliberations.

It is within the realm of this dialogue that we may exert an influence and potentially offer guidance to policymakers as they convene to deliberate on amendments during the subsequent cycle of legislative evaluations.