03 Feb 2014

The strategic role of parastatal organisations to the development of the country must be revisited to enhance their contribution to economic growth, says finance and development planning minister, Mr Kenneth Matambo.

Presenting the 2014/15 budget speech in Parliament on Monday, February 3, Mr Matambo said the parastatal sector had grown both in quantity and complexity hence the need to ‘revisit the strategic role they play in the development of this country.’

He said the performance of parastatal organisations during the past financial year was mixed, with some performing satisfactorily while others incurred losses. He stated that among the parastatal organisations that have been performing satisfactorily was Botswana Telecommunications Corporation which recorded a net profit of over P375 million in the financial year 2011/12.

The minister said the other one was Botswana Development Corporation with a net profit of over P143 million, despite challenges with some of its projects. “The National Development Bank also recorded a net profit of P45.7 million, despite the depressed economic growth and heightened competition from new entrants in the banking sector.

“Similarly, the Botswana Savings Bank also achieved a net profit of P18.6 million reflecting a significant increase in interest income occasioned by the high uptake of unsecured personal loans, and the impact cost containment measures during the period under review,” Mr Matambo said.

However, he said for various reasons, other parastatal organisations have under-performed, such as the Botswana Power Corporation which recorded a huge loss of P1.652 billion in 2011/12.

That also followed a loss of P796.6 million recorded in the previous year due to operational challenges at Morupule B Power Station. The minister said as a result of technical problems that delayed the commissioning of the Morupule B Power Station, BPC was forced to undertake emergency power supply.

Such measures, he said, included the use of diesel fuelled generator and continued import of power from South Africa to complement domestic power supply. Mr Matambo said all these increased BPC operational costs thereby requiring government funding support. He added that Botswana Meat Commission registered a loss of P290.9 million in 2012, following another loss of P233.5 million in 2011.

He said the low performance of 2012 was attributable to the delisting of BMC from the European Union market as well as the outbreak of Foot and Mouth Disease in the North East District. “There is no doubt that state owned enterprises played a major role in the development of our economy, especially in the earlier years after independence.

“However, I believe the role of state owned enterprises in the development of this country should continue to complement that of government, given the limited resources at the disposal of government.

“In this regard it is important that these organisations are managed efficiently and effectively for them to contribute to sustained economic growth,” said the minister. He said the government would be pursuing some measures such as the implementation of the privatisation policy in order to reduce the burden on the fiscus.

He also said progress had been made in merging some parastatal organisations with the merger of Botswana Postal Services and Botswana Savings Bank set to be concluded in March. ENDS