Guest Contributor | Sep 22, 2020 | 0
“Hybrid governance model may lead to tug-of-war”
The hybrid governance model under which state-owned enterprises will be governed, might lead to a tug-of-war between the Ministry of Public Enterprises and line ministry’s responsible for each enterprise.
This was an observation by a senior associate of the Nordic Africa Institute, Dr Henning Melber. Like many economic and political commentators, he expressed concerns over the dual governance system in state-owned enterprises. The system will see the Ministry of Public Enterprises and each line ministry enforcing its own governing rules over state-owned enterprises.
Most experts feel the ministry in charge of public enterprises should take full governance of the enterprises as the “line ministries have performed poorly in the past.” Melber made an example of the National Planning Commission, saying that it was established as a cross cutting authority with the result that it never really was able to execute any leverage above line ministries.
“It hence became much of a toothless lion. A similar challenge could exist for the hybrid governance model, ending in in-fights and animosities between the ministry claiming ultimate control and those ministries under whose portfolios the state-owned enterprises fall,” Melber told the Economist.
He noted however, that the Hybrid governance model is not a bad idea, provided that the ministry performs better than those line ministries in charge.
It also requires that the line ministries, which are still involved in many of the state-owned enterprises’ operations, play along and adheres to the authority of the Ministry of Public Enterprises, instead of (mis) understanding the state-owned enterprises under their portfolio as ‘backyards’ and their private assets, in which they can do (or not do) what they like.”
Melber also added that privatization is the only logical solution for state-owned enterprises that continue making losses pointing out that these losses are subsidized by taxpayers.
“They are a means for good governance, not for self-enrichment or the abuse of monopolies. They should provide necessary services. Namibia seems to have a range of SOEs whose existence is difficult to justify based on such criteria. They either have to be fundamentally refurbished or abandoned,” Melber stressed.
Earlier this week, the Institute of Public Policy Research (IPPR) released a briefing paper on the Hybrid Governance model. “The hybrid nature of this system means that better governance is not guaranteed.
Many state-owned enterprises will still fall under line ministries, several of whom have failed at ensuring good governance in the past. Ensuring they also live up to high standards will be a difficult task,” IPPR research associate Max Weylandt said in the briefing paper.
Weylandt recommended that for government to make the new overall governance rules effective, the law should include clear penalties for non-compliance.