Africa-Press – Eswatini. The future looks bleak for at least 22 public companies that are currently about E13.4 billion in the red.
The situation is so dire for most of these parastatals that Auditor General (AG)Timothy Matsebula has noted that they may need a serious government bail-out to be able to sustain their operations going forward.
Some have been found by the AG to be operating at a big loss, and are no longer a going concern, as they face a risk of insolvency (liquidity problem), that is, not having funds to repay required obligations (liabilities) and finance operational costs.
A number of them are failing to remit taxes to the Eswatini Revenue Services (ERS) failing, from each individual employee, a tax amount and remit it to the commissioner general no later than the 7th day of the subsequent month.
Some are operating on a huge wage bill, reaching as high as 80 per cent of their total income, that includes subvention from government with only 20 per cent left to finance their operations, while others are heavily reliant on the government subvention for survival and are failing to generate their own revenue.
Optimistic
However, Minister of Finance Neal Rijkenberg is optimistic and has assured that government has a well thought plan to remedy the situation.
He said the plan is in the form of the Eswatini Economic Policy Analysis and Research Centre (ESEPARC) State-owned enterprises (SOEs) reform plans that government has formulated.
“That clearly outlines the plans that Cabinet has approved and we have started working on it. Some radical changes reducing them from 49 to about 30 are coming. All of these reforms have legislative changes that will need to be done to the founding Acts establishing the entities so as we draft these changes, each must be passed by Cabinet, Parliament and His Majesty King Mswati III. It’s a long road ahead, but the issues you mentioned will be dealt with as we implement the reforms,” assured the minister.
The AG reported in his Compliance Audit Report that the Public Service Pension Fund (PSPF), for instance, was operating at a deficit amounting to E10 139 135 000 in the financial year ended March 31, 2021.This was after an actuarial valuation, which is an analysis that compares the assets and liabilities of a pension plan. He raised a concern that this deficit means that the amounts contributed consistently by government employees, and government, when combined
with investment earnings, may not be sufficient to pay promised benefits in full over the long-term.
The AG also noted that the University of Eswatini (UNESWA) for the year ended March 31, 2021 had an accumulated deficit of E1 087 171 217 and a net operating deficit of E189 172
410. He noted that its current liabilities exceeded its current assets by E947 119 955 and outstanding unremitted taxes to the Eswatini Revenue Services amounted to E688 208 822.
It was also disclosed that the university received at least 70 per cent of its funding through subvention from government and on average the university receives 40per cent of what it has requested from government.
Also, the university literally subsists on credit from suppliers. This means that it obtains goods and services on credit and fails to pay some of the suppliers.
Subvention
The AG expressed concern that since government’s revenue streams are declining, without increased subvention or other means of generating income within the university, the services provided to the public may not be sustainable, in the near future.
The university is also at risk of losing assets that are held as security for a bank overdraft facility, which has significantly increased by E19 359 885 (244 per cent), from E7 938 865 to E27 298 750.
The Royal Science and Technology Park (RSTP) has been found to be heavily reliant on government finances, which makes the entity unsustainable after its subvention was increased from E38 500 000 to E44 751 750 in the year under review. Despite the increase of 16.24 per cent in subvention for operations amounting to E6 251 750, the entity received an additional shareholder loan amounting to E234 284 028 in the same financial year under review.
Subvention
The entity also has a huge wage bill, that is 87.4 per cent of the subvention received from government, since it stood at E39 105 478. It also witnessed significant increases in its operating costs.
The public enterprise only generated income of E2 263 739 from its operations, and government was pushed to increase the shareholder loan to keep the entity running, which is not sustainable, particularly since government revenue is projected to decline. Considering the unhealthy liquidity and working capital of the public enterprise, the AG found it alarming that there was a noteworthy increase in bank overdraft of E349 251 (282 per cent) to a balance of E473 114, from a balance of E123 863 in the previous year.
The issue of long outstanding creditors (unpaid suppliers) with creditors’ balances still not cleared was also raised. The creditors’ balances, amounting to E4 340 308.06 have been outstanding, with some dating back as far as 2011.
The entity has also failed to remit its subscriptions to government in respect of the Public Enterprises Loan Guarantee Fund since 2016 to date, and the accumulated liability balance was E2 090 273, as at March31, 2021.
The Eswatini Public Procurement Regulatory Agency (ESPPRA) is another troubled entity, presenting with unsustainable operations with its liabilities exceeding assets by E3 138189 and unremitted taxes amounting to E4 752 618.
The National Maize Corporation is also listed as another company that is struggling, having incurred a net loss of E21.19 million for the year ended March 31, 2021, which, according to the AG, means the entire investment made by government as shareholder has been drained, such that now the shareholder is indebted to rescue the public enterprise.
To ensure sufficient stock at all times, NMC operates on an overdraft facility and its wage bill is 86 per cent (that is E16 456 855) of the total income generated of E19 127 619, and only
E2 670 764.00 (14 per cent) was left to finance the other operations, repaying liabilities and increasing assets.
Loans
Eswatini Housing Board has been found to be behind with its loans by E17 670 153, but it was clarified that between April 1, 2021 and March 16, 2022, a total of E8 670 151.73 catch up payments had been made, and the remaining E9 million would be paid as and when funds become available.
The heavily-indebted Eswatini Television Authority (ETVA) is also in desperate need of a bail-out from government, and among the debts weighing heavily on the authority, include unremitted payroll deductions amounting to E75 266 945 and late remittance of statutory returns, amounting to E4 329 705.
A struggling Pigg’s Peak Hotel also continues to be a drain to government after incurring a loss of E6 773 798 in two years. Eswatini Posts and Telecommunications Corporation (EPTC) had certain customers disputing their material outstanding balances amounting to E31 483 261.03 which they owed the entity as at March 31, 2021.
There were also long outstanding staff loans amounting to E259 169.46 with some dating back to 2005. The company also has long outstanding trade and other receivables amounting to E85 400 975.72.
The company was operating at a net deficit ofE118 186 000 with total unremitted taxes amounting to E176 999 214.20. The AG opined that the corporation was spending beyond its income, and therefore will struggle to meet its obligations hence government may have to rescue it.
Insolvency
The AG was also alarmed at the insolvency that appears to be inevitable if the corporation continues incurring losses. Eswatini Civil Aviation Authority (ESWACAA) has been found to be operating at a net deficit of E162 206 790 and accumulated a loss of E1 348 832 659. Its unremitted taxes amounted to E12 335 642 and its current liabilities exceeded current assets by E17 514 632.
Audit of the Eswatini Nazarene Health Institutions showed that the institution had an accumulated deficit of E334 642 384; and net operating deficit of E102 630 538; with its current
Liabilities exceeding current assets by E294 332 913; and unremitted taxes amounting to E328 009 954.31. The entity also has a huge wage bill of E181 462 362, while the total income received during the year was E149 765 604.
The Good Shepherd Mission Hospital and College of Nursing has material uncertainties, which threaten the ability of the entity to continue sustaining delivery of health services to the public and achieve its mandate.
Deficit
The entity had accumulated a deficit of E96 692 367, and a net operating deficit of E16 880 865; with its current liabilities exceeding current assets byE144833597; and unremitted outstanding taxes amounting to E138 282 765.
The hospital also has a huge wage bill, standing at 97.4 per cent (that is E109 600 839) of the total income of E112495325, and onlyE2 894 486.00 (2.6 per cent) was left to finance the operations.
Eswatini Environmental Authority (EEA) incurred a deficit amounting to E2 819 262.98 and an over expenditure amounting to E2 376 352.42 in the financial year under review.
Eswatini Tourism Authority was found to have incurred a net loss of E1 213 447 and E4 287 476 for the year ended March 31, 2020.
The entity had unremitted taxes amounting to E1 275 842 in respect of deducted employees’ taxes (PAYE).
Eswatini Electricity Company (EEC) was found to be long withholding tax amounting to E8.5million.
The Pigg’s Peak Town Council, Ezulwini, Ngwenya, Malkerns, Mankayane and Vuvulane Town
boards are also struggling with the collection of rates, and some have failed to remit taxes.
For More News And Analysis About Eswatini Follow Africa-Press
