Forging Ahead with Reforms - · PDF fileForging Ahead with Reforms SESSION 1: OVERVIEW OF THE RECENT REFORM PROCESS DBSA Vulindlela Academy, Midrand, ... •Seteu de l’Enegie: SNEL

3rd Meeting of the OECD Network on the Governance

of State-Owned Enterprises in Southern Africa

Forging Ahead with Reforms

SESSION 1: OVERVIEW OF THE RECENT REFORM PROCESS

DBSA Vulindlela Academy, Midrand, South Africa 8 – 9 October 2012

1

Ministry of Economy

Institute for Public Sector Enterprises 2

The SOE Sector in Angola 3

1. The State Enterpreneurial Sector of Angola

2. The Institutional Framework

3. The Legislation

4. Challenges for the Implementation of Effective Governance Guidelines for the Region (SADC)

In Angola, the SES is composed of a significant number

of (i) Wholy owned and (ii) Partially owned public

enterprizes, operating in different sectors of economic

activity

This is a direct consequence of the planning economic

system that existed in Angola up until the end of the 80’s.

SOE´s 4

The State Enterpreneurial Sector of Angola

Sector Empresarial 5

Wholly Owned SOE’s by Sector of Economic Activity

6%

6%

9%

6%

12%

0% 11%

2% 6%

3%

21%

18%

AGRICULTURA E PESCAS

COMÉRCIO (LOGÍSTICA E DISTRIBUIÇÃO

DE ALIMENTOS)

COMUNICAÇÃO SOCIAL

EDUCAÇÃO, SAÚDE E SANEAMENTO

BÁSICO

ENERGIA E ÁGUA

HOTELARIA E TURISMO

INDÚSTRIA, GEOLOGIA E MINAS

PETRÓLEO E GÁS

SERVIÇOS FINANCEIROS

TELECOMUNICAÇÕES E TECNOLOGIAS

DE INFORMAÇÃO

TRANSPORTES

URBANISMO E CONSTRUÇÃO

The SOE Sector in Angola

Are created by a government (head of state) decree, with the joint initiative of a line ministry and the shareholding ministry (Ministry of Economy);

It’s 100% owned by the state; Their Governance bodies are comprised of: 1. The Board of directors: with a maximum of

11 directors, including 2 non-executive directors;

2. The Fiscal Boad: composed of a chairmain and two additional members


Are created in accordance with the company (comercial) law;

In essence, they are business corporations in which the state has the majority stake and can be established by:

(i) Other wholly owned Public Enterprises (PE’s);

(ii) Subsidiaries of PE’s; (iii) Public (State) institutes; (iv) Private Companies; (v) Private individuals


Its governance bodies consists of:

Anual General Meetings

Board of Directors

Fiscal Board


The Institutional Framwork 9

1. The State Enterpreneurial Sector of Angola Sector


3. The Legislation



The Institucional Framework

We have a dual governance system of SOE’s: Sectorial Oversight – exerted by the line Ministries

in charge of different sectors of economic activity (e.g. Transport, Miming, Construction, Finance, Agriculture) Ownership Function – exerted by the Economic Ministry, through the (i) GTSEP – Tecnical Office for the SES and (ii) ISEP – Institute for Public Sector Enterprises



Line Ministries

Specific Role/Tasks: Policy formulation and regulation of the sector that falls under its portfolio; Evaluation of plans and bugets proposed by the companies; Take part on the evaluation of SOE Boards; Take part on the appointment and firing of SOE Board members;

Fonte: Lei 9/95 de 15 de Setembro



The Role of the Ministry of Economy (Shareholder)

Formulation, coordination e execution of the ownership policy of the state; Proposing legislative and regulating measures for the management of the assets of SOE’s; Proposing and coodinating the implementation of the privatization policy; Participating in the monitoring and validation of the framework of PPP’s;

* Fonte: Decreto Presidencial nº 1/11 de 3 de Janeiro



Ministry of Economy: Organizational Chart




Ministry of Economy -

Technical Office for the State Entrepreneurial Sector (SES)

Plays a strategic Role, specifically:

Preparation of policy proposal on the SES

Legislative proposals in the field of privatization

Research relevant to the SES




Institute for Public Sector Entreprises

Plays a Tecnical/Operational Role:

Policy execution related to the SES including

privatization of SOEs;

Monitoring and technical assistance to enterprises

Decreto 37/09 de 13 de Agosto




Evaluation of strategic, business and investment plans as well as

anual and plurianual budgets of SOEs;

Propose methods and standards for accountability and enforce the

terms of accountability;

Propose guidelines for the administration and control of the assets of

SOEs

Fonte: Decreto 37/09 de 13 de Agosto

Specific Tasks




Evaluation of financial statements and reports of SOEs;

Proposing inspections (probing) of SOEs;

Keep up dated technical, economic and financial data of SOEs;

Propose the necessary tools to ensure the effective management of

state shareholdings


Specific Tasks (Cont.)



Institute for Public Sector Entreprises (Organizational Chart)


Sector Empresarial Público em Angola 19

1. The Angolan State Enterpreneurial Sector


3. The Legislation Governing SOE’s



The current legislation governing the SES is the following:

Law 9/95 Law of Public Enterprises

Decree n.º 8/02 Regulation to the Law of Public Enterprises

Law n.º 10/10 Amendments to the Law of Public Enterprises


• Under the restructuring process of the SES, the Government is expected

to approve the following legal instruments:

Framework-Law of the SES – New law of the State Enterpreneurial

Sector

Regulation of the framework law of SES

The Statute (status) of Public Managers

Remuneration Statute of Public Managers


1. The Angolan State Enterpreneurial Sector


3. The Legislation Governing SOE’s

4. Challenges for the Implementations of Effective Governance Guidelines for the Region (SADC)


KEY CHALLENGES FOR THE IMPLEMENTATION OF EFFECTIVE GOVERNANCE GOVERNANCE :

Countries have different forms of organization of their states;

Countries are in different stages of their economic and social

development;

Countries posses institutions (public and private) on different stages

of their organizational and funcional development


Gradual approach for the establishment of good practices for SOE

governance, by means of issuing tecnical guidelines or standards of

relevant common interest, namely:

A framework for monitoring and evaluation of SOEs performance;

Treatment of public infrastructure on the books of SOEs;

Accounting for subsidies and other transfers from the state to

SOEs;

Appointment and evaluation of board members;

Remuneration of SOE board members;

Performance contracts (framework) between the state as

shareholder and SOE board members;

Ministry of Economy

Institute for Public Sector Enterprises 25

PEEPA

THE 3RD MEETING OF THE OECD NETWORK ON THE GOVERNANCE OF

SOEs IN SOUTHERN AFRICA

8 – 9 OCTOBER

OVERVIEW OF THE CURRENT REFORM PROCESS - BOTSWANA

PRESENTED BY

MR KGOTLA M. RAMAPHANE – CEO PEEPA

Botswana at a glance

27

THEME SUBJECT YEAR INTERNATIONAL COMPARISON

Geography / Demography

Land Area 582 000 km2

48

Population 2 Million 2012 144 Labour Force 1.3 Million 2012 137

Economy GDP 17 Billion USD 2011 111 GDP Growth rate 4.60% 2011 78

GDP Composition Agric 2%, Ind 45%, Manf 53% 2011

Govt Contribution to GDP 2011 GDP/Capita 16 000 USD 2011 74

Industrial production growth rate

11% 2011 10

Investment (GFCF) 28% of GDP 2011 25 Exports 6 Billion USD 2011 Imports 6 Billion USD 2011

Public Finances Revenue 5.6 Billion USD 2011

Expenditure 6.2 Billion USD 2011

Taxes and Revenues 32% of GDP 2011 81 Public Debt 14.5% of GDP 2011 126

The Botswana SOE Landscape

28

There are currently 34 SOEs in Botswana

Ownership and oversight of PEs is decentralised to line Ministries

Oversight is devolved to Boards of Directors and control to Executive Management.

Established as Statutory Corporations or under the companies Act

Includes both:-

16 Commercial entities e.g. utilities, service providers, banking services etc.

18 Non-commercial entities e.g. as regulatory bodies, research institutions, investment promotion agencies and tertiary education institutions

Non commercial Public entities depend entirely on Government subventions (Estimated at P2 billion in 2011/12)

Financing constraints due to global economic slowdown

Commercial SOEs were initially capitalized by Government, but are at liberty to raise debt capital in the market

Sometimes Government however provides a guarantee for the loans

29

FISCAL IMPLICATIONS OF SOE

The Botswana SOE Landscape

30

SOE Involvement in regional integration:

• Electrical power generation

• Telecommunications interconnectivity

• Rail transport systems

• Air travel

• Cross border trade facilitation

KEY SOE GOVERNANCE REFORMS

• The Privatisation Policy of 2000

– Established PEEPA

– Mandates PEEPA to assist government in exercising oversight over the

performance and governance of SOEs.

The Privatisation Master Plan of 2005

– Provided for an integrated Corporate Governance framework

– Corporate Governance, formalised through shareholder compacts as the

main instrument in the exercise of shareholder oversight.

– Framework incorporates other elements such as Merit based Board

selection process, Board charters Board evaluation and codes of conduct.

• Revised Incomes Policy of 2005

– Entrenches elements of the corporate governance framework in the

Governance of SOEs

• Botswana Institute of Directors 2010

– Draft code of corporate governance for Botswana

31

KEY SOE GOVERNANCE REFORMS

PEEPA has integrated these elements of shareholder oversight into a framework of governance instruments intended to:

– Provide clarity on Government’s expectations of the SOE performance

– Promote achievement of mandates/objectives of the SOEs

– Enhance shareholder oversight

– Promote greater accountability and transparency

– Allow for the monitoring and evaluation of SOE performance

32

AN INTEGRATED FRAMEWORK

• Board Performance Evaluation

• Merit based board nomination process

• Board Charter

• Shareholder Compact

Strategic alignment

Strategic resourcing

Performance contracting

Delegation of authority

Board Roles and Responsibility

Compliance

Performance

Development

Sustainability

Board composition,

balance competence

PROGRESS TO DATE - UPTAKE OF THE

CGF

0

2

4

6

8

10

12

14

16

18

Shareholder Compact Board Charter TMBBNP Board Evaluation Toolkit

CG INSTRUMENTS

2012 Survey

CHALLENGES TO SOE GOVERNANCE

REFORMS

1. No clear and consistent Ownership policy and adoption of

best practice framework still discretionary in SOEs due to

decentralised ownership of PEs

2. Restrictive legislative frameworks

3. No clear separation of social, developmental and

commercial objectives

4. Poorly remunerated Non Executive Directors

5. Low levels of awareness of Corporate governance best

practice in Botswana

35

FUTURE DIRECTIONS

Develop an Ownership Policy for SOEs.

Create corporate governance capacity in government

and SOEs

Finalise Code of Corporate governance for Botswana

Address issue of remuneration of Non Executive

Directors

THANK YOU

Third Meeting of the OCDE Network on Gorvernance of State Owned Enterprises in

Southern Africa 8-9 October 2012

Midrand, South frica

L’ETAT DES LIEUX DE LA REFORME DES ENTREPRISES DU PORTEFEUILLE

DE L’ETAT

Alex N’kusu Dongala Siya

Secrétaire Exécutif Adjoint du COPIREP

Plan de la Présentation

1. Introduction

2. Réalisations à ce jour

– Modernisation du cadre juridique et institutionnel

– Diagnostics et Options stratégiques des entreprises

– Missions de stabilisation des activités

– Opérations de désengagement de l’Etat

3. Transformation des Entreprises Publiques

• Etablissements et services publics

• Sociétés commerciales

4. Questions transversales

– Dimension sociale de la réforme

– Dettes et Créances croisées.

I. Introduction • La réforme des entreprises publiques :

– S’inscrit dans le cadre des réformes économiques initiées par le Gouvernement depuis 2001;

– S’inspire des réformes sectorielles initiées par chaque Ministère sectoriel;

– Les réformes économiques ainsi engagées visent à stimuler la compétitivité de l’économie et à relancer la croissance économique.

• Principes directeurs

– Secteur privé : rôle de production et création richesses

– Etat: rôle normatif et régulateur

Désengagement progressif du secteur marchand

1. Introduction (suite)

• Stratégies

• Modernisation du cadre juridique et institutionnel

• Réformes sectorielles

• Restructuration des entreprises au cas par cas

• Réforme du Conseil Supérieur du Portefeuille (CSP)

• Secteurs cibles et Entreprises prioritaires:

• Secteur des Mines: GECAMINES;

• Secteur de l’Energie: SNEL et REGIDESO

• Secteur des Transports: SNCC, SCTP, RVA et RVM

• Secteur des PTT: SCPT

• Secteur Financier (Assurances): SONAS

2. Réalisations à ce jour • Modernisation du cadre juridique et institutionnel régissant le

secteur des entreprises du Portefeuille. C’est l’acte fondateur de la réforme. Promulgation des quatre (4) lois ci-après:

• La Loi N°08/007 du 7 juillet 2008 portant dispositions générales relatives à la transformation des entreprises publiques;

• La Loi N°08/008 du 7 juillet 2008 portant dispositions générales relatives au désengagement de l’Etat (Conseil des Ministres : organe de décision – COPIREP: exécutant les décisions gouvernementales.)

• La Loi N°08/009 du 7 juillet 2008 portant dispositions générales applicables aux établissements publics;

• La Loi N°08/010 du 7 juillet 2008 fixant les règles relatives à l’organisation et à la gestion du Portefeuille de l’Etat.

Publication de 5 décrets d’application

2. Réalisations à ce jour (suite)

• Résultats de la transformation des Entreprises publiques

– 20 entreprises transformées en sociétés commerciales (statuts publiés au J0)

– 20 entreprises transformées en établissements publics (statuts publiés au J0)

– 5 entreprises transformées en service public

– 6 entreprises non viables, dissoutes et en liquidation


• Contraintes de la transformation en sociétés commerciales

– Publication des statuts avec des capitaux sociaux provisoires (respect délai légal)

– Due diligences juridiques et financières

• Patrimoines non maitrisés

• Endettement excessif (dettes croisées avec Etat et EP)

• Etats financiers non fiables

• Travaux en cours pour détermination des capitaux réalistes et bilan d’ouverture

– Inventaires et évaluation patrimoines

– Règlement dettes et créances croisées

– Règles de reprise des passifs non assurables


• Restructuration des Entreprises publiques (Sociétés commerciales)

– Réalisation des études diagnostics des entreprises structurantes (techniques, opérationnel, financier et organisationnel

– Définitions des options stratégiques de

restructuration:

• Phase de stabilisation

• Phase de restructuration profonde (par le biais des PPP)


• Missions de stabilisation des activités : Stratégie Intérimaire.

– 1ère Phase de restructuration qui s’applique à des entreprises dont l’activité est vitale et certaines en danger de cessation d’activités.

– Objectifs visés: arrêter la dégradation de la situation technique, opérationnelle et financière de l’entreprise.

– Ces missions ont été mise en place avec le concours des firmes internationales spécialisées dans les entreprises ci-après :

• GECAMINES

• SCTP

• RVA

• SNCC

Quelques résultats obtenus mais timides faute de financement conséquents

– Ce processus est en préparation à la SNEL et à la REGIDESO qui devront bénéficier de contrats de services à conclure pour chacune d’elles avec un opérateur privé spécialisé (contrat de performance).

2. Réalisations à ce jour (suite) • Quelques options stratégiques retenues

– SNCC:

Désengagement des autres activités

Concession intégrée

– RVA

Séparation des activités (navigation aérienne et d’exploitation aéroportuaire)

Mise en place des PPP pour l’exploitation aéroportuaire

– SCTP

Transformation en société de patrimoine

Mise en place des PPP pour les activités opérationnelles (Ports maritimes, Chemin de fer, Ports et transport fluvial, etc.)

– REGIDESO

Transformation en société de patrimoine

Mise en place des PPP pour la production et la distribution de l’eau

2. Réalisations à ce jour (suite et fin)

• Opérations de désengagement de l’Etat

Quelques opérations déjà engagées:

• Hôtel KARAVIA: Concession BOT de 15 ans. Rénovation et la Exploitation de l’Hôtel à ses frais contre paiement redevance annuelle de 2% du chiffre d’affaires à l’Etat.

• CCT : Vente actions de l’Etat (49%)

• Fleuve Congo Hôtel : Concession BOT: Transformation d’un immeuble moderne appartenant à l’Etat en hôtel 5 étoiles

• CINAT: cession des 58 % sur les 92% que détient l’Etat dans cette société d’économie mixte. Négociation en cours.

• SOSIDER: Concession BOT de 20 ans. Attente signature.

2. Réalisations à ce jour (suite et fin)

• Aéroport International de N’djili : Projet de mise en concession du terminal passagers (En cours)

• SCTP : Ports maritimes et Chemin de fer : Etudes de mise en œuvre des PPP possibles

4. Questions Transversales qui plombent la réforme

• Dimension sociale de la Réforme

– Problème crucial qui obère la mise en œuvre de la réforme

– Nécessité d’une approche globale faisant l’objet d’un consensus gouvernemental

– Risques majeurs de disparition des pans entiers de savoir-faire suite aux départs à la retraite.(ONATRA : seuls 200 agents resteraient en fonction à fin 2011).

– Coûts sociaux en jeu dans le cadre de la réforme estimés à plus d’un milliard des dollars américains.

4. Questions Transversales (suite et fin)

• Dettes et créances croisées

– Les entreprises du Portefeuille de l’Etat possèdent des dettes et créances entre elles d’une part, et avec l’Etat de l’autre;

– Cette situation empêche certaines d’entre elles d’être performantes à cause du volume important des créances accumulées sur les autres entreprises du portefeuille et sur l’Etat;

– Des saisies-arrêts sont opérées sur les comptes des débiteurs par les créditeurs appartenant pourtant tous au même propriétaire.

– L’examen attentif et la résolution de cette question permettra une mise en œuvre facile du processus de leur réforme.

• Manque de financement des investissement pour le redressement des entreprises avant PPP

.

Je vous remercie de votre attention

PSDPSD

Ministry of Finance and Development Planning

PSDPSD

Taking stock of the SOEs in Lesotho

Private Sector Development

A Brief Overview Prepared by Reitumetse Elias

Private Sector Development Manager: Ministry of Finance

PSDPSD

Presentation Outline

1

2

3

Current Realities

-Poor SOE’s performance

Conclusion

-Political Undercurrents

-Poor Accountability & Reporting Mechanisms

Ministry of Finance and Development Planning 1

4

Connection with other Regional integration Initiatives -Integrated action plans

-Membership to umbrella organisations

-Peer Review Mechanisms

Challenges Faced

- 25% of SOE’s highly subsidised by Government

- New National Strategic Development Plan

-Socio-oriented investment decisions

PSDPSD

Prevailing dynamics

1. Highly subsidised SOE’S New

Political Dispensation

2. Phasing out of the NSDP

3. Ill informed investment decisions

2 Ministry of Finance and Development Planning

PSDPSD

Challenges Experienced

Underperformance of the majority of

the SOEs

Interference from powers that be

Poor adherence to reporting

mechanisms

PSDPSDThe Bigger Picture…

Efforts & activities of the SOEs are informed by

international, regional & national initiatives

Millennium National Strategic Sectoral &

Development Development Ministerial

Goals Plans Plans

To ensure that we are part of this picture we:

-subscribe to networks

-active members of APRM

-tap on regional & global knowledge reservoirs & technical support

-align our efforts with regional & international partners

State Owned

Enterprises


PSDPSDIn conclusion………

Lesotho still has a long way to go to improve performance of SOE’s through

Enabling governance structures Sufficient capital resources

-Policy Framework -Vibrant PPP

-Robust M& E -Multiple Sourcing

-Rigorous reporting -Capital Venturing

Continuous learning from best practice

-R& D

-Networking

-Peer Review Mechanisms


Republic of Mauritius

State-Owned

Enterprises

Reform

October 2012


There are around 150 (SOEs) representing some 15 % of GDP in almost all economic sub-sectors including the utilities, commercial, economic, educational, welfare, social, and cultural sectors employing around 20,000 people or 1.6 percent of the population.

Six out of 15 large SOEs had an operational deficit in 2010, the highest number since 2006; and government transfers to SOEs are amounted to 3 percent of GDP in 2010

Total SOE debt was 7 percent of GDP or 12.5 percent of total public debt in 2010 with half of it being guaranteed by the government

Unfinished reform agenda


Many SOEs operating in areas where they do not

address any identified market failure or provide

any public goods

Inadequate pricing policies negatively impact

SOE financial sustainability and public sector

investment.

Many SOE’s services continue to be costly and of

poor quality,

Unfinished reform agenda


The performance of SOEs in terms of service delivery was

undermining overall economic competitiveness

They are not held fully accountable for their performance;

There is no clear demarcation of the ownership and oversight

roles and a lack of transparency and accountability

They do not publish annual reports without being penalised for

non-compliance and

They do not have strategic plans or any targets or

performance indicators agreed between the respective sector

ministries and their boards.

Unfinished reform agenda: Challenges


A phase-wise approach

An ambitious Public Enterprise Reforms Programme was initiated

in 2007. A Big Bang approach:

• Centralizing of all revenue departments under the Mauritius

Revenue Authority; closing down the DWC and the Police Garage

in 2008

• Removal of subsidies on rice and flour

The focus initially was to go for some quick gains .

Strong opposition to reforms

A more gradual approach adopted aiming at efficiency

improvement leaving the major reforms for a subsequent stage.

Republic of Mauritius Results limited; hands off approach; not underpinned by monitorable action plans Laying down the foundation

The first phase of State-Owned Enterprises Reform

• Developing the PEMITS (Public Enterprise Management

Information and Tracking System), an online database system to

monitor performances of SOEs.

• In depth study of some SOEs in financial difficulties.

• A Joint Public Private Steering Committee to oversee the

restructuring of the service providing institutions in the sugar

sector.

• Business Process Reengineering, reorganization and

streamlining of processes


A new dynamism supported by a first Public Sector Performance DPL with the World Bank.

In 2011, a lead agency was created , the Office of Public Sector Governance (OPSG), within the Prime Minister’s Office to provide leadership, coordination and cohesion to the implementation and monitoring of reform initiatives

OPSG accompanying SOEs in implementing their performance

enhancing reforms

With the help of the WB , development of an action plan for

OPSG

The Second phase of State-Owned Enterprises Reform



An action plan oriented towards an outcome-oriented public sector

A gradual approach within a framework

• that holds sector ministries and SOEs accountable

• which will foster a dialogue among all stakeholders and

• clearly define the efficiency gains that must be achieved

by each SOE.


Main elements of Action Plan


• The classification the Public Entities for e.g into commercial Public

Enterprises and non commercial Public Entities

• Updating the Public Financial Management to clarify the

ownership relationships between the state and SOEs

• All SOEs must have strategic plans and business plans

• Each SOE should conclude a “Corporate Objectives Statement”

(COS). This COS must be agreed to by the board and the parent

Ministry.

• Improved monitoring using the Parastatal Information

Management System (PIMS) to gather relevant, accurate, and up-

to-date information to benchmark their performance and monitor

efficiency gains

• Reform plans for underperforming SOEs and

• Additional analytical work to better understand key parameters and

trends in the public sector.


Some performance targets :

Assistance to 8-10 SOEs to implement a Corporate Objective Statements (COS) and completion of 3 COS by end 2012 and 10 for 2013

PIMS fully operational with 40 SOEs included in the system by the end of 2012 and 100 for 2013 and

Restructuring of 2 SOEs in 2012 and 5 in 2013.



Thank You

Merci

SOE CORPORATE GOVERNANCE

INSTRUMENTS AND

CHALLENGES IN MOZAMBIQUE

By: Odete Tsamba Executive Director

State Shares Management Agency

(IGEPE) Midrand, 8-9 October 2012

71

IGEPE MANDATE

• IGEPE was created in 2001 by a Council of Ministers Decree (41/2001) of December 21st with the mandate of: Managing State Shares in business partnerships Rendering support services to companies and ensure

adequate management instruments and planning Defining and managing the Directors carrier path Ensuring preparedness and training for those involved in

SOEs management

▫ IGEPE is accountable to the Minister of Finance

72

SOEs PORTFOLIO

• SOEs in Mozambique are composed by: ▫ Public Enterprises (PE) owned 100% by the State (11) ▫ Government Linked Companies (GLC) with State participation

of at least 50+1% (15)

• The State holds significant shares in as many as 140 enterprises

• PEs are under the Ministry of Finance (The treasury) control

• GLCs are controlled by the State Shares Management Agency (IGEPE)

73

IGEPE AND PORTFOLIO MANAGEMENT

• IGEPE controls a portfolio of 129 companies • Appoints Directors in companies where it is the major

shareholder • Collects quarterly reports from SOE s Managers on

Companies performance • Is represented in all SOEs Annual Shareholders

meetings • Channels share dividends from SOEs to the State

Treasury (Ministry of Finance)

74

GOVERNANCE INSTRUMENTS • Corporate Governance in Mozambique is rooted in

the following instruments: ▫ The Commercial Code: Governs the establishment, operations and governance

of corporations and enterprises in Mozambique (Act 2/2005 of December 27th)

▫ Directors Regulations (28/2007 of August 23rd) ▫ Procurement decree (15/2010 of May 24th ): Regulates the procurement of goods and services by

Public entities ▫ Money Laundering law (7/2002 of February 5th): Supports the combat on economic crimes

▫ Corporate Governance Best Practices Guide

75

IGEPE CORPORATE GOVERNANCE BEST PRACTICES GUIDE

• Inspired by OECD Corporate Governance principles, IGEPE developed in 2009 a Corporate Governance Best Practices Guide containing: ▫ Description of the legal background highlighting

Governance principles ▫ Corporate Governance values ▫ The role of State as owner and partner ▫ The shareholders annual meeting ▫ Shareholders rights and duties

76


▫ Board Structure, composition and duties ▫ Appointment of board members, code of conduct

and conflict of interests ▫ Board remuneration (the fixed and variable parts) ▫ Board support Committees (Remuneration, best

practices, risk management, Auditing, investments…)

▫ The Fiscal Board ▫ Independent Auditing (importance of independent

auditing and appointment of auditors)

77


• Current Developments: ▫ Dissemination of the Guide among SOEs

Managers ▫ Review of the Articles of Association of SOEs to

abide by the Guide ▫ Review of SOEs Governance Models

• By the end of 2013 all main SOEs under IGEPE are due to comply with the Best Practices Guide

78

NEW GOVERNANCE INSTRUMENTS

• Employees Empowerment

▫ During the privatization process in 90’s the Government of Mozambique reserved up to 20% shares to Employees, as a way of ensuring the minorities' rights

▫ However employees could not afford to pay for their equity shares

79


▫ A new Decree (19/2011 of May 26th) establishes: A fixed term of 18 months for employees to

decide to acquire their reserved share Employees shall forfeit 50% of the reserved

equity share In return the government gives at a

simbolic value of $US0.04 (1MT) the remaining 50% Employees may decide to sell their freely

acquired share

80


• CODE OF ETHICS FOR THE PRIVATE SECTOR Produced by the Mozambique’s Institute of Directors ▫ Based on business best practices ▫ Refers to the principles of Integrity, Respect and

Responsibility ▫ The guidelines are based on a “yes” response to the

following main decision-making filters: Is it legal? Is it policy? Is it ethical? Can I live with it?

81


• THE SOE LAW (6/2012 of February 8th) for Public Enterprises (PEs) Establishes a 4 year “Management Contract” between the Sectorial Minister and the SOE Managers which includes: ▫ Enterprise development Policy ▫ Quantified objectives ▫ Investment practices ▫ Refinancing Criteria

82


• THE SOE LAW (Cont.) • This law is stricter in the following issues:

▫ Financial control by the controlling entity ▫ Iinternal control based on ruling auditing principles Measures to minimize fiscal risk

▫ Monthly reporting to financial controlling entity

83


• Management Contract: (for GLCs under IGEPE) ▫ IGEPE is developing a set of performance indicators to be

agreed with the managers at the beginning of their term. These include: Financial results (Profit); Share dividends distribution; Processes and product development; Investments and reinvestments (business expansion); Best practices implementation (Based on the Best

Practices Guide); Improvements in human capital and organizational

systems (training, new supporting technologies…). Indicators will be used for managers

evaluation and will impact on job retention.

84


• Investment policy • The policy is being revised to emphasize

the following: ▫ strategic sectors where Government (IGEPE)

should invest new prospects for IGEPE portfolio and future

investments in the current portfolio disinvestment areas, thus conducting to resizing

current portfolio

85

OUTSTANDING CHALLENGES • Set up a formal coordination forum involving the

Control Entity (eg: IGEPE), the relevant government Ministry and other major government stakeholders in order to:

• Consult with stakeholders • Review SOEs policy • Assess SOEs performance

• Review SOE legislation to include aspects related to internationally accepted Corporate Governance Best Practices.

86

OUTSTANDING CHALLENGES

• Board member nomination and remuneration should be based on merit

• A roster of candidates should be established from where IGEPE or Government officials shall source for incumbents

• Full dissemination of Corporate Governance principles to all SOEs

• Review all SOEs articles of association and Corporate Governance Models to abide by the approved Guide

87

OUTSTANDING CHALLENGES

• Pursue research leading to strengthening and segmentation of the SOE sector in order to:

• Design adequate policies for each SOE segment • Assign specific objectives for each segment and

assess results • Enhance the full potential of each SOE segment

in line with its defined objectives

88

89

Third Meeting of the OECD Network on the Governance of SOEs in Southern Africa.

8-9th October 2012 Midrand, JHB

South Africa

Presenter: I Murangi

Director SOEGC, Namibia

http://upload.wikimedia.org/wikipedia/commons/0/00/Flag_of_Namibia.svg

http://upload.wikimedia.org/wikipedia/commons/f/fc/Coat_of_Arms_of_Namibia.svg

Introduction/background

Size of the country

Composition and size of the SOE sector

SOE reforms in Namibia Overall (legislative reform)

Remunerative reform

Three top SOE Governance Challenges

How national SOE reform fits within a wider regional integration process

Independence: 21 March 1990

Population: 2 100 000 people (Census 2011)

Unemployment rate: 51.2%

Total geographical area: 824,292 sq km

Natural resources: diamonds, copper, uranium, gold, silver, lead, tin, lithium, cadmium, tungsten, zinc, salt, hydropower, fish, etc.

Exports-commodities: diamonds, copper, gold, zinc, lead, uranium; cattle and beef, processed fish, karakul skins

52 SOEs are listed in the SOE Act since 2006.

16 are SOCs.

Currently the number of SOEs has increased to approximately ninety (90) SOEs.

Categories: regulators, service rendering and economic and productive SOEs.

Centralized Model. The SOEGC has an oversight function on all these SOEs. Direct supervision is with the line/portfolio Minister

SOEs are further classified into three (3) tiers, for the purpose of remuneration of CEOs and senior managers as well as board of directors, etc.

Robust SOE reform

Survey 2001

Objectives Assess the strength and

weaknesses of SOE governance in Namibia

Review best international practice in SOE governance

Formulate a policy framework for the future governance of SOE in Namibia

Develop an implementation framework to ensure effective and continuous compliance with and development of the policy

Areas covered Significance of the SOE

sector Performance of SOEs Legislative Framework Transparency to and

communication with external stakeholders

Ownership representation Remuneration Board practices Performance management Private sector participation

Recommendations Board of Directors

Executive Management

Performance management

Financial accountability

Tariff policy

Stakeholder involvement

Ensuring governance policy compliance

Regulatory framework

Increased private sector participation and the promotion of competitive environment

Implementation framework

Mandating of the policy framework

Establishment of the SOEGC

Establishment of the associate structures

Recruitment of the Director

Preparation of work programme and budget

Procurement of implementation resource

Ongoing communication

To provide the Namibian SOEs a clear framework to comply with and to enable them to pursue best practice standard

To remunerate SOE’s senior managers fairly and sustainably

Transparency and Disclosure

Shareholders to approve salaries

Three (3) tiers Criterion used:

Total assets

Total revenue

Total primary employment

100

Tiers Economic and Productive

Regulators Service rendering

Tier 3

Tier 2

Tier 1

Remuneration: CEO

Bands for Total Guaranteed Pay ( TGP)

Size of SOE Lower quartile Median Upper Quartile

90th percentile

T3 Xxxx

xxxx xxxx xxxx

T2 xxxx

xxxx

xxxx

xxxx

T1 xxxx

xxxx

xxxx

xxxx

Board of Directors

Audit committee Other sub- committee

NE Chair NE Dir NE Chair NE Dir NE Chair NE Dir

Annual/Retainer fee

LQ

Median

UQ

Sitting allowances p/a(assuming four meetings p/a)

LQ

Median

UQ

Governance Model (central vs. dual) • Preferred/recommended model awaits endorsement

Structure • Too small

• Not yet approved

• Failure to attract requisite skills

• Failure to retain skills and experienced cadres

Compliance • Lack of corporate guidelines

• Small staff establishment

• Huge SOE sector

Regional

• Unofficially adoption of King 3

Regional

•Adoption of regional best practices

Regional

•Outward and inward Regional Benchmark visits

Thank you

CONFIDENTIAL

CONFIDENTIAL

Overview of the current reform process

Ms Orcilla Ruthnam

CD: Governance Department Public Enterprises

106

3rd Meeting of the OECD Network on the Governance of State Owned Enterprises in

Southern Africa

8-9 October 2012 DBSA

Table of Contents

• The evolution of DPE

• Current Regulatory Regime

• The Role of State Owned Companies in general and

within the DPE Portfolio

• Shareholder management and oversight (rationale and

tools)

• Governance challenges and successes

CONFIDENTIAL 107

Government is going through a fundamental review of the role that State

Owned Companies (SOC) should play in the South African economy.

• 1994 – 1998: Established as the office of privatisation focused on disposal of SOC (with the

intrinsic assumption that SOC had intrinsically negative development impacts.)

• 1998 – 2003: Emphasise shifts to restructuring of SOC with focus on equity partnerships,

initial public offerings and concessioning of specific assets to optimise shareholder value

and economic efficiency.

• 2003 - 2010: Develop the SOC as focused sustainable state owned business entities

delivering on a specific strategic economic mandate.

• 2010 - : Instrument of a Developmental State – but how?

Restructuring/

privatisation

2003 Current

Consolidation of core

services

Instrument of

Developmental State?

These changes have happened in a policy vacuum regarding the role

of SOC in driving developmental objectives.

108

EVOLUTION OF DPE

109

FROM FRAGMENTED TO PORTFOLIO APPROACH

Office established in 1994 to champion privatisation of SOC

In 1999 – first shift and Government mandate shifted to building the SOC

In 2004 - real shift in developing shareholder compacts and DPE strategy changed to direct its SOC portfolio to focus on the consolidation of core services and disposal of non-core assets and operations

Overarching objective : direct SOC to align strategy with the needs and policy direction of the domestic economy, namely:

* Positioning or entry of SOC in pursuit of industry or sectoral policies

* The development and promotion of policies by the DPE that enhance the operation of SOC

CONFIDENTIAL 110

Director-General

Public Enterprises

Minister

Public Enterprises

DDG

Legal & Governance

DDG

Energy & Broadband

Enterprises

Head

Corporate Services

Chief

Financial Officer

(CFO)

DPE HIGH LEVEL ORGANISATIONAL STRUCTURE

DDG

Transport

Enterprises

DDG

Economic Impact

and Policy Align

DDG

Strategic

Partnership

DDG

Manufacturing

Enterprises

Head

Communications

DDG

Chief Operating Officer

Special Advisor

Deputy Minister

Public Enterprises

Chief Audit Executive

Special Advisor

SOC Regulatory Regime

SOC

enabling

Legislation

Companies Act

• Memorandum and

Articles of Association

/ MOI

Public Finance

Management Act,1 of

1999

* Treasury Regulations

* Shareholders Compact

* Significance and

Materiality Framework

* Corporate Plan

Sector legislation and

policies (e.g. Electricity Act,

Electronic Communications

Act)

Public Audit Act ,

Auditing Profession

Act, IRBA (code of

professional Conduct

of Registered

Auditors)

Other general

legislation, guidelines

and policies (e.g. tax,

labour, environmental

laws)

* Responsible Corporate

citizen

111 - Confidential -

112

Why a Government Shareholder Management Model?

To recognise the value of the State’s shareholding and to optimise

such shareholding to achieve long range strategic interventions to

leverage key outcomes

To enhance Government’s capacity as shareholder of strategic state

owned enterprises and induce consistent and harmonised shareholder

management and state owned enterprise corporate governance

practices

To provide a predictable and transparent framework of performance

accountability in respect of the economic value of its investment in

state owned enterprises

113

• Increasing the rate of investment in fixed assets (particularly infrastructure

capacity), technologies and skills to support the growth process.

• Enhancing the competitiveness of the economy through better infrastructure

services, managing the value of the currency and skills upgrading.

• Encouraging labour intensive and green activities.

• Leveraging public procurement to develop manufacturing.

• Promoting social compacts around development objectives.

Performance

Evaluation

Framework

There are a number of policies that define our national economic development priorities.

The New Growth

Path

Industrial Policy

Action Plan

State Owned Companies with the DPE Portfolio

114 CONFIDENTIAL

115

The DPE’s mission is to ensure that the SOC are both financially sustainable and deliver on government’s developmental objectives

To optimize the alignment between the role of the SOC in the national economic

strategy and the performance of the DPE’s portfolio of enterprises through delivering

best practice shareholder management services and engaging with stakeholders to

create an enabling environment for such alignment.

DPE

National Interest Enterprise Interest

The Shareholder has Specific Powers and Responsibilities in the SOC Governance System

Management

Shareholder Executive Authority

Board Accounting Authority

Companies

Act & PFMA

establishes

relationship

Management Agreement

Board cascades delegations and

performance expectations down to

management

Shareholder Management

Defines powers and responsibilities of

shareholder vis a vis the Board and

Management

Presidency

Performance of Minister of

Public Enterprises

Parliament

Transparency and

accountability

- Confidential - 116

Shareholder Expectations and Governance Framework: Contents

• SOC stakeholder/accountability structure

• DPE Statutory mandate for SOC Oversight

• PFMA & National Treasury Regulations

• Company Law

DPE

GOVERNANCE

TOOLS

Quarterly reports and Annual Financial Statements

Significance and materiality Framework

Board appointments and remuneration

Corporate Plan

Strategic Intent Statement

Transaction guidelines and section 54 Approvals

Board performance evaluations and attendance

Shareholder compact

Investor Brief Annual General Meetings

117

STRATEGIC SOC OVERSIGHT: LOGICAL PLANNING, MONITORING & EVALUATION PROCESS

Intra-governmental consultations

Consultations with sector depts, NT and Presidency (NPC and M&E) on SOC strategy alignment to MTSF

Quarterly

SOC Corporate Plan

PFMA Sec 52

Strategic Intent

Statement

Shareholder Compact

TR 29.2

Performance Monitoring

TR 29.3

-Quarterly Reports

- Dashboard

- Quarterly & annual Investor Briefs

SOC AGMs & Reporting to Parliament PFMA Sec 65

Confidential 118

119

The following provides an illustration of this approach in

regard to Transnet’s strategic mandate and Strategic Intent

Strategic Mandate

Transnet’s key role is to assist in lowering the cost of doing business in South

Africa, enabling economic growth and security of supply through providing

appropriate ports, rail and pipeline infrastructure as well as operations in a cost

effective and efficient manner within acceptable benchmark standards

Example of Objectives in Strategic Intent

• Reduce the total cost of logistics as a percentage of transportable GDP;

• Accelerate modal shift by maximising the role of rail in the national transport

task

• Accelerate investment to provide rail, port and pipeline capacity to support

growth

• Enhance operational efficiencies against international benchmarks

The DPE has also developed an electronic dashboard to

systematise reporting & analysis

Isibuko dashboard developed to allow for timely reporting & enable rapid access to

information in key areas including financial, operational, capital investment,

capitalisation, intra-governmental policy, socio-economic, risk etc

Ensures clear, comprehensive & timely SOC performance reporting & monitoring that

provides adequate information to make key strategic decisions

• SOC inputs key performance data required by DPE for monitoring process.

• SOC validates & approves submitted data.

• DPE adds analysis & reports on SOC performance.

• SOC & Portfolio Performance is available via the Dashboard.

120

121

The DPE has also developed an electronic dashboard

(Isibuko) to systematise reporting & analysis

•“One version of the truth”

• Key performance data captured from source documentation.

• Data is validated and approved before being presented.

• Shorten the waiting time for obtaining key performance data.

• SOC Performance monitoring database – retain historic data, to use for

trending.

• Automatic notification on change of data and due submission tasks.

• Aggregation of standard key performance data across SOC into the DPE

portfolio.

122

A procurement policy to entrench supplier development in

each transaction has been developed

Organisation Process

Governanc

e &

controls

People/Change Management

CSDP

Strategy

Other

Policies Procure-

ment Policy Procurement

Policy 2

1

Systems

3 4 5 6

7

Inte

rnal develo

pm

ent

fram

ew

ork

• Integrate supplier development concerns in all procurements.

• The development of the strategic plan is the tip of the iceberg – now need to embed the process in the organisation.

• Implicitly encouraging best-practice procurement as demand forecasting is the key to supplier development.

• Top management continue to focus on the major procurements

Comments

123

Oversees implementation of internal SOC skills development:

Ensure SOC participates in initiatives to support National Skills Development Agenda.

Ensure scarce and critical skills defined in shareholder compacts and monitored on

dashboard.

Ensure increased skills collaboration across DPE SOC.

Promote and coordinate optimal utilization of SOC training facilities to contribute to

additional artisan training for national pool.

Solicit funding from DHET/NSF and SETAs to fund training of additional artisan trainees for

national pool.

Monitors SOC supplier network skills development related to infrastructure

investment programmes and maintenance programmes through dashboard.

Facilitates partnerships with SOC, DHET, SETAs, NBI, FET Colleges and relevant

stakeholders to collaborate on initiatives to maximise and support artisan training to

increase the national pool of artisans.

The DPE has established a unit to manage skills development

BOARD APPOINTMENT PROCESS

12

4

125 • :

• the following, amongst others:

The DPE has developed a comprehensive Board Induction

programme

knowledge, skills and understanding of SOC’s ;

government ownership expectations;

Assist directors’ meaningful contribution to effective stewardship and successful performance of SOC

The specialist nature and complexity of SOCs;

The challenges of SOC risks and ensuring performance and delivery;

The unique nature of the SOCs shareholder, policy and administrative relationships;

The specific public sector regulatory environment, Public Finance Management Act (PFMA), Treasury Regulations, etc.

The exposure associated with demanding fiduciary duties, legal and regulatory requirements, liability of Directors, best practice governance and business requirements, etc.

The ability of experienced Directors to contribute to the knowledge and development of inexperienced Directors through their interaction;

EQUIPS SOC

BOARD OF

DIRECTORS

WITH :

DPE

DEVELOPED A

TOOLKIT

WHICH

ADDRESSES:

126

Managing remuneration is an extremely complex and

contentious issue!!!

• SOC are both commercial and part of the state – this creates a tension

– Some argue that remuneration should be linked to public service pay

scales.

– Others argue that the pay of executives must be capped for a reasonable

period until the gap between lower income earners and executives is

narrowed.

– The SOC themselves argue that to compete with the private sector for

skills requires we benchmark against the private sector.

– We are searching for a pragmatic, scientific methodology that will

encompass the dual nature of the SOC.

• Key issue in the short term is to ensure that incentives are linked to

performance against compact targets, rather than narrow financial

considerations.

• There are serious concerns around long term rolling incentives for executive

directors, the payments of which lead to a bloated remuneration packages (3

times fixed pay)

• We are presently comprehensively reviewing our remuneration policy – it

is an area for dialogue between state shareholder managers.

Governance challenges

• Audit outcomes reveal that SOC continue to experience

challenges such as financial mismanagement and non-

compliance with legislation –

Transgression of internal SOC policies & procedures

Qualified audits (lack of internal controls, inadequate information

provided to auditors, fruitless and wasteful expenditure, late

submission of information);

Recurring Supply Chain Management audit findings;

Information asymmetry of impending or emerging risk and

commercially sensitive information; and

Managing reputational risks

CONFIDENTIAL

127

DPE Oversight Experience

Clarity of shareholder and

stakeholder role and purpose

Aggregated portfolio view

Consolidated performance monitoring and

oversight of 8 entities

Formalising and structuring Board

management

Achieved consistency and rational

oversight

Stronger SOC balance sheets

Focused SOC business operations and

management

Successes

Asserting shareholder rights

and objectives

Uniform reporting and governance

frameworks

Duplicative statutory obligations and

regulation

Statutory gaps on planning and

reporting content

Optimal performance with positive

impact on the economy

Strong balance sheets and

consequent reduced reliance on fiscus

Clear mandates

Challenges

Anticipation of the outcomes and implementation of the recommendations of

the Presidential SOC Review Committee on SOC governance reforms

128

CONFIDENTIAL

THANK YOU

Reforms In State Owned

Enterprises in Swaziland

8-9 October 2012

VP Nxumalo

Director, Public Enterprises Unit

Ministry of Finance

Swaziland

131

Brief Background

• Since achieving independence in 1968

Government has established SOE in 12

different sectors of the economy.

• This has been mainly because the private

sector has not developed enough or there

is not much interest.

132

Sectors covered by SOE

• Agricultural Development (5)

• Business Promotion (7)

• Financial Institutions (4)

• Health Institutions (3)

• Housing Institutions (1)

• Information (1)

133

Sectors covered by SOE

• Public Utilities (3)

• Tourism and Environment (5)

• Transportation (4)

• Education and Training (2)

• Sports and Culture (2)

• Youth Affairs (1)

134

Size of the Sector

• 40 State Owned Enterprises

• Assets worth E9.8 billion in 2011.

• 17 self sustaining

• 23 Government funded.

• There are 16 other businesses where

Government has minor shareholding.

135

Size of the Sector

• Total net income E330m in 2011

• Subvention was E550m in 2011.

136

Size of the Sector

• Account for 7% of formal sector

employment.

• Account for 22% of public sector

employment.

• Contribute 8% to GDP

• Average ROCE was 3.3% in 2011.

• Gearing averaged 43% in 2011

137

Major Services Provided by SOE

• The SOE provide most of the national

infrastructure and services:

– Water

– Electricity

– Telecommunications

– Railways

– Tertiary Education

138

Governance of SOE

• SOE are distributed within 12 out of 20

different line Ministries.

• Ministers with SOE under their portfolio

are politically responsible for them.

• Boards of SOE report to their line

Ministers.

139

Governance of SOE

• SOE were created by different legal

instruments - mainly Acts of Parliament.

• Government, as the 100% Shareholder,

wanted to have oversight, control and to

monitor the SOE sector.

140

Governance of SOE

• An Act of Parliament - The Public

Enterprises (Control & Monitoring) Act of

1989 was enacted.

• The Act establishes a sound operational

framework for corporate governance of

SOE.

141

Governance of SOE

• The Act establishes a Unit within the Ministry of Finance – The Public Enterprises Unit (PEU).

• The PEU basically monitors the performance of SOE and provides technical advise, to line Ministers and Cabinet, on the operations and policy management of the SOE.

142

Governance of SOE

Appointment of Board members

• Line Minister in consultation with Cabinet

• Term is normally 3 years.

• Members get retainer and sitting fees.

• Fees are regulated by Cabinet on the

advise of PEU

• Can not sit on more than 2 Boards at a

time.

143

Governance of SOE

Appointment of Board members

• Don’t terminate all at the same time.

• Balance of skills – a challenge

• Four meetings per year- a challenge

• Payment of fees – a challenge

• Government officials on Boards - a

challenge

144

Governance of SOE

Appointment of Chief Executive Officer and Chief Financial Officer

• Board nominates and line Minister appoints in consultation with Cabinet

• 3 year contracts renewable upon Boards recommendation

• Pay packages negotiated with Board, Line Minister with Cabinet approves

• Pay packages now regulated by Cabinet

145

Governance of SOE

SOE should provide information to PEU

and Line Ministry

• Quarterly Reports

• Annual audited accounts

• Corporate Plans

• Strategic Plans

• Budgets

146

Governance of SOE

Appointment of Independent External

Auditors

• Nominated by the Board and approved by

line Minister with Cabinet

147

Governance of SOE

Major policy decisions approved by Line Minister with Cabinet

• Adjustment to level and structure of tariffs, prices for non-regulated sector

• Investments disinvestments

• Expansion of operations

• Review of level or structure of staff salaries and wages and conditions of service

148

Governance of SOE

Government oversight

• Cabinet receives from the PEU a

consolidated report, with technical advise,

on the quarterly performance of all SOE

• Cabinet receives annual audited accounts

of each SOE.

149

Governance of SOE

Parliamentary Oversight

• Parliament receives the consolidated

quarterly report, with advice from PEU, on

the performance of SOE.

• Parliament receives annual audited

accounts of each SOE.

150

Governance of SOE

Disciplinary Tribunal

• A Disciplinary Tribunal seats over any case of

violation of the PE Act.

• Tribunal comprises

– Chairman – Member of either House of Parliament

– Two other members of either House of Parliament

– Two other persons

– Auditor General

– Official from Ministry of Finance

151

Reforms in the SOE Sector

• Reforms started in the late 1990s

• Government embarked on a reform policy in 1998 called the Government’s Economic and Social Reform Agenda (ESRA).

• ESRA called for a major statement on the reform of the SOE sector.

152


• The statement called for the privatization

of some of the services that were being

provided by SOE.

• Government through the Ministry of

Finance establish a privatization policy to

complement the policy statement of 1998.

153


• Privatization policy was approved in 2004

after wide ranging consultations with key

stakeholders.

154


• Government called for the formulation of a

Privatization Roadmap

• Business strategies were formulated for

each SOE.

155


• Need of each SOE for regulation was

considered.

• Need for Restructuring was considered.

• Benefits that might be gained from

privatization were considered.

156

Achieved Reforms so far

• An independent energy regulator -SERA

was set up in 2010.

• Bill seeking establishment of

Telecommunications regulator is now in

Parliament.

• A regulatory authority for civil aviation –

SWACCA was set up in 2010

157


• A regulatory authority for quality standards and

measures – SWASA, was set up in 2009.

• Act establishing the 100% owned electricity

provider - SEC was amended setting it up as a

company instead of being a Board as previously

was.

• This was meant to make it ready for investors to

come in when Government is ready

158


• In 2008 Government approved that the

100% State Owned Bank – Swazibank,

can have a strategic partner. That process

is still on-going.

• In 2011 the Swaziland Revenue Authority

was set up to ensure efficient collection of

Government revenue.

159


• The Swaziland Competitions Commission

was set up in 2009 to regulate

competition.

• One of the two 100% owned hotels-

Shiselweni Hotel and Casino was sold to a

private operator.

160


• Some operations of the 100% owned

railways enterprise were out-sourced.

• A Bill seeking to convert the Government

Department- Central Transport

Administration (CTA) to a fully fledged

SOE is in Parliament.

161


• The existing Public Finance Management Act is being amended to ensure proper control, management, transparency, and accountability by all entities including SOE that receive funding from Government.

• A draft Bill seeking to repeal the PEU Act in order to establish a Public Enterprises Agency has been discussed by Government and sent for further drafting.

162

Governance Challenges

• Misunderstanding of the authority that

Government has over the affairs of SOE.

• SOE sometimes feel that Government

should not exercise control on some

operational issues while Government feels

otherwise.

163

Governance Challenges

• When Government tries to put in place

certain policy measures on SOE, some

take that as interference.

• Some times Government takes time to

resolve issues relating to SOE.

• Funds shortage for Government leads to

poor performance by subvented SOE.

164

Interventions

• The Ministry of Finance through the PEU introduced a training program on good corporate governance for all SOE Boards of Directors and management.

• The training now needs to be extended to Government.

• Training providers were accredited to conduct the training.

• King III principles adopted.

165

How Reforms fit with Regional

Challenges

• Almost all the reforms so far seem to fit with regional challenges.

• The problem may be the speed at which they are carried out.

• The speed may be slow but we believe the reforms will certainly get us somewhere.

• Any support would be welcome.

166

State Owned Entities

Agriculture

• Swaziland Dairy Board

• Swaziland Maize Corporation

• Swaziland Cotton Board

• National Agricultural Marketing Board

• Swaziland Water and Agricultural

Development Enterprise

167


Transport

• Royal Swazi National Airways Corporation

• Swaziland Railways

• Central Transport Administration

• Swaziland Civil Aviation Authority

168


Finance

• Swaziland Development and Savings

Bank

• Swaziland Revenue Authority

• Swaziland Development Finance

Corporation

• Motor Vehicle Accidents Fund

169


Utilities

• Swaziland Electricity Company

• Swaziland Posts & Telecommunications

Corporation

• Swaziland Water Services Corporation

170


• Business Promotion

• National Industrial Development Corporation of Swaziland

• Small Enterprises Development Company

• Commercial Board

• Swaziland Competition Commission

• Swaziland Investment Promotion Authority

• Swaziland Standards Authority

• Swaziland Youth Enterprise Fund

171


Education & Training

• University of Swaziland

• Sebenta National Institute

172


Tourism and Environment

• Piggs Peak Hotel and Casino

• Swaziland National Trust Commission

• Swaziland Tourism Authority

• Swaziland Tourism Development

Company

• Swaziland Environment Authority

173


Information

• Swaziland Television Authority

Housing

• Swaziland National Housing Board

Labor

• Commission for Mediation Arbitration and Conciliation

174


Health

• National Emergency Committee on

HIV/AIDS

• Swaziland Nazarene Health Institutions

• Good Shepherd Hospital

175


Sports

• Swaziland National Sports Council

Culture

• Swaziland National Council of Arts and Culture

Youth Affairs

• Swaziland National Youth Council

176

Thank you

Mr. Eliah Mutowo Permanent Secretary

Ministry of State Enterprises and Parastatals

Zimbabwe

SOEs in Zimbabwe

Contribute upwards of 40% of GDP;

Enablers to economic development;

Spearhead economic recovery and development;

Ensure food security;

Infrastructure rehabilitation.

Major SOEs Challenges

Undercapitalization;

Huge debt overhang;

Deterioration of infrastructure;

Limited access to lines and credit;

Sanctions;

Inadequacies in Corporate Governance.

Energy Regulatory Framework

To encourage private sector participation in power generation;

Zimbabwe Energy Authority in place;

Zimbabwe Electricity Supply Authority corporatized and unbundled into separate business units;

National Oil Company unbundled into two business units, one for trading business and the other for infrastructure provision.

Other Sectorial Regulatory Reforms

Telecommunication Sector opened up for competition with a Regulator;

Consultations in progress to restructure National Railways of Zimbabwe to separate regulatory functions from other functions;

Restructuring in progress to separate regulatory functions from other functions.

Other reform Strategies

Promotion of good corporate governance practices;

Improvement of performance Management System;

Improvement of legislative provisions;

Codification of corporate governance principles.

Governance challenges

Separation of ownership function and other government functions;

Approval process for budgets, plans and procurement;

Performance management system.

Separations of Ownership function

Corporate governance framework advocates for separation of ownership from regulatory and policy formulation;

Conflict in approval process for example tariffs.

Outcomes of conflicted approvals

Under-capitalised state enterprises;

Poor service delivery;

Pressure on the fiscus;

Service demand greater than supply;

Outside assistance required.

Budget approval process

Involves institutional outside the control of the Board in term of statutes;

Private sector resolutions passed at AGMs or extraordinary AGMs;

AGMs minimises risks associated with delays.

Procurement Process

Involves institutions outside control of the board in terms of statutes;

Delays the process of procurement;

Increases exposure to competition;

Need for efficient, transparent, fair and documented procurement procedures.

Performance Management inadequacies

Absence of formal performance agreement between responsible Minister and the Board;

Absence of formal performance contract for the Chief Executive Officer;

Performance targets and indicators are not formally shared and discussed;

Basis for evaluation compromised.

Documents

Forging Ahead with Reforms - · PDF fileForging Ahead with Reforms SESSION 1: OVERVIEW OF THE RECENT REFORM PROCESS DBSA Vulindlela Academy, Midrand, ... •Seteu de l’Enegie: SNEL