Monday, September 27, 2021

Too many parastatals are weighing heavily on the economy

A key feature that has been a big lesson for authorities in Botswana during the pandemic has been a systemic lack of dynamism among our public institutions.

Weighed down by covid-19 many of our institutions simply became paralysed.

Some of them were literally saved by endless decisions by government to extract more money from the public and then pass it to them.

Take Botswana Power Corporation.

In less than twelve months there has been two tariff increases of electricity in Botswana.

The first one was much steeper.

No sooner had the public learnt to deal with that one had government put in another one.

It was a deadly blow for a public that has  not had a meaningful salary increase for quite a while.

Water utilities too has had to be propped up by increasing tariffs.

Same too with Botswana Housing Corporation.

Admittedly, the increases are largely due to the fact that government no longer wants to act like a truss for these companies.

There used to be a time when every year government would pay billions into these companies in subventions simply to get them going.

Now government is broke. And is no longer able to do that.

The biggest problem is that these companies were never created to operate without government assistance.

Botswana government has announced that it is reviewing the make-up of its parastatals with the aim of reducing the number of merging some and doing away with others.

That is a welcome move.

Some of the parastatals were created as nothing short of trophies.

Others were a result of empire building by previous politicians who had no shortage of money.

There used to be a time in the history of this nation when money was not an issue.

Those tasked with the review of the parastatals must do so quickly.

Some of these state owned enterprises have really run their time.

They have become nothing more than employment bureaus and also cesspools of corruption.

They drain resources and bring nothing to the table.

Early on after independence when the private sector was really non-existent there was a public imperative for them to be created.

That imperative no longer exists.

Even those that are still needed like BPC and WUC, it is important to break them down or dis-bundle them.

BPC for example could be broken into three separate and independent units; generation, transmission and distribution.

That could bring some efficiencies.

Right now, BPC is too big and unwieldly.

Some units like generation only exist in name.

BPC still gets a lot of power from South Africa where it is bought expensively and in United States dollars.

That should change.

The new outcome should be to put into place a totally new framework of modern and agile organisations.

The review should be a bit ruthless in cutting the size of parastatals. Some should be wiped out. The less efficient should be merged and Chief Executives be removed.

The review should not end there. Laws establishing the parastatals should be overhauled.

The current laws allow for too much political interference.

It is of course unclear the extent to which politicians will be prepared to yield political control.

We still have politicians who want more control and less efficiency.

The pandemic might have changed that, together with realities that government no longer has money nor technical depth to run these big companies.


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