01 Feb 2021

Botswana has developed a comprehensive rationalisation strategy review  of parastatals and state-owned enterprises (SOEs) with a  view to address some  of the  shortcomings in their governance and performance, says Minister  of Finance and Economic Development, Dr Thapelo Matsheka. 

 In his presentation of a budget speech on February 1, Dr Matsheka indicated that the proposed strategy would address issues such as duplication of activities and overlapping mandate, hence identification of  some parastatals for privatisation. 

The restructuring, he said, would involve review of mandates as well as founding statutes and align them to the transformation agenda. 

He said the decision on rationalising, restructuring, privatisation and liquidation of SOEs would be made in the first half of this year. 

Minister Matsheka stated that even though some SOEs registered profits in the financial year 2019/2020, such profits  were much lower than in the previous  year except for Botswana  Housing Corporation (BHC) and Botswana Communication Regulatory Authority (BOCRA).

He said Botswana Telecommunications Corporation Limited registered a net profit of P106.4 million in 2019/2020 compared to P162.1 million recorded the previous financial year which translate to decrease  of  34.4  per cent.

 He noted that Water Utilities Corporation (WUC) net profit also declined  by 60.4 per cent with the  accumulation of P75.6 million compared to P190.9 million in 2018/2019 financial year.

The decline in  WUC net profit margins, he said were largely due to increase in expenditure to cover water  treatment and distribution as well as an impairment  loss  on development  expenditure.

 He said Botswana Housing Corporation recorded an increased profit of P49.3 million compared to P16.7 million in the previous year, thus attributing the increase due to increased revenue on rental income.

Minister Matsheka, however reiterated  that some SOEs continued to register unsustainable losses, stating that Botswana Power Corporation  (BPC) registered a net loss of P1.4 billion in 2019/2020, compared to the prior year net profit of P201.9 million.

 The BPC’s loss, he said,  reflected power imports  due to the poor performance of Morupule B power station.

 He said BotswanaPost registered a net loss of P45 million in 2019/2020 compared to a net loss of P0.95 million the previous year. 

Botswana  Agricultural Marketing Board (BAMB) registered also registered a net  loss of P40.7 million compared to a net profit of P70.8 million in 2018/2019.

Dr Matsheka attributed the  BotswanaPost profit loss to a rise in other operating  expenses adding that the  BAMB’s  loss was attributable  to an impairment loss  and substantial increase in cost of sales. 

He said the results illustrated the critical importance of restructuring the SOEs sector, including potentially closing down perennial loss markers, as government could not continue bailing out such parastatals from the scare tax revenues.

 Thus, Minister Matsheka cautioned SOEs  to follow the best principles of corporate  governance by providing  audited accounts  on time and raise a greater portion of their revenues. ends