Africa-Press – Namibia. THE government expects to receive N$2,6 billion from five public enterprises as dividends – an indication that the majority of state-owned enterprises are all still being run at a loss.
Earnings from public enterprises could have been more through the sale of assets, but the state has no idea how wide its assets base is.
Dividends expected to flow to the state kitty include the Bank of Namibia (N$400 million), Namibia Post and Telecommunications Holdings Limited (N$600 million), Namdeb Holdings (N$1,2 billion), Namib Desert Diamonds (Namdia) (N$300 million) and the Namibia Diamond Trading Company (N$150 million).
Other notable companies such as NamPower, NamWater, Namibia Wildlife Resorts, Agro-Marketing and Trade Agency, August 26 Holdings, Epangelo Mining, the Lüderitz Waterfront, Zambezi Waterfront, Namibia Institute of Pathology, the Agricultural Bank of Namibia, the Development Bank of Namibia, and a host of others, are all loss-making.
The National Petroleum Corporation of Namibia (Namcor), recently returned to profits, but has not declared any dividends.
Analysts say even the N$2,6 billion expected inflow is bloated, considering that the outturn from the previous fiscal year was already 27,1% lower.
Namibia has 22 commercial public enterprises (CPEs), and the listed five that are expected to return some cash to the treasury suggest that Namibia appears to be profitable in the diamond and telecommunications space.
The central bank does not have its investments in Namibia and mainly earns its income from foreign markets.
In the 2021/22 fiscal year, only N$671 million was received as dividends, while an estimated N$6,9 billion is the outturn recorded to date for the 2022/23 fiscal year.
Over the years, the state’s allocations to public enterprises has always been more than returns.
This year, the treasury announced that it cut bailouts to public enterprises to just N$1 billion.
This bill last year was at N$2,3 billion and was stretched over 22 enterprises, which are now under the control of Iipumbu Shiimi as the minister of finance and public enterprises.
Although Shiimi has cut transfers, he is helping them behind closed doors as these public enterprises will use the state to guarantee debt of an extra N$2 billion during the coming fiscal year, pushing government guarantees to N$12,7 billion.
Last year, the World Bank Group and the International Finance Corporation (IFC) led an onslaught against public enterprises, saying they were bloated, inefficient and held to the lowest standard of accountability.
According to the two international lenders, Namibian public enterprises were frustrating the private sector and preventing it from leading growth and creating more jobs due to being disadvantaged at competing with public enterprises, which are constantly bailed out, inefficient, loss making and monopolistic.
The two global lenders said Namibia’s public enterprises and the private sector are operating on an uneven playing field, because they are not held to the same standards of accountability and compliance to the law.
Over the past few years, there has been a drive by the state to force some state-owned entities to perform, which led to the liquidation of Air Namibia, as well as the sale of MTC shares.
TransNamib this year also received no budget bailout, and the chief executive officer resigned.
Analysts at Simonis Storm, in their post-budget note, said the ongoing public enterprise reforms and the initiative to compile a public fixed asset register could see improved performance among state-owned enterprises.
“The asset register can assist the government in selling unused or unproductive assets and so benefit non-tax revenues. Public entity reforms stem from the advice provided by the high level panel, who argued for the public enterprises ministry to be transformed into a holding company,” reads the note.
In addition, an electronic performance monitoring system is already developed and must be rolled out to the 22 CPEs in 2023.
The analysts said they understand that transformation plans are being developed for the 22 CPEs, with the aim of making them profitable to reduce dependency on the budget for bailouts.
“Indeed, these reforms are only expected to lead to an increase in non-tax revenues (through dividends) from 2024/25 onwards,” reads the note.
The World Bank and the IFC had also indicated that public enterprises have great buying power in the local economy, yet they rarely buy local, despite being bailed out by the state.
Early this year, the treasury launched procurement best practices that would see to it that public enterprises source certain products from the local economy.
Analysts at Cirrus Capital have said expectations of state revenue from public enterprises as dividends have decreased considerably, and is most likely going to reduce over the years.
The state has also been over-budgeting dividend expectations. For example, it had indicated that it was going to receive about N$400 million from Namdia last year, but received only N$150 million.
There has been no indication of a possible liquidation, assets sale or privatisation of any state-owned company in the recent budget documents, but the Presidency has flirted with the idea of reviving the national airline, Air Namibia.
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