SOE’s next year set to adopt a performance management system linking remuneration to performance
Last week, the Ministry of Finance and Public Enterprises (MFPE) announced that all state-owned enterprises (SOEs) will be required to adopt a performance management system linking remuneration to performance starting in 2024 to enhance accountability and foster performance-driven governance.
Finance Minister Iipumbu Shiimi in a statement said that the ministry is developing an integrated system, starting with commercial SOEs on 01 April 2024, with plans to extend to others.
“Some of our SOEs are performing badly and failing to deliver the critical service they were created to perform. We must be frank and talk openly about the poor performance of these entities and must find solutions as a matter of urgency,” he said.
According to Shiimi, poorly performing SOEs grapple with challenges like substantial losses, high wage bills exceeding 55 percent of revenue on average, uncontrollable expenditure, noncompliance, poor performance, service delivery issues, internal conflicts, and unethical conduct.
Shiimi said urgent interventions are needed to reform SOEs’ portfolio, adding that moving forward, the focus will include reviewing and validating the integrated business plans of SOEs, emphasizing ensuring that every commercial entity has an integrated business plan.
He said SOEs will also be required to submit biannual reports on key performance indicators progress to the Ministry of Finance and Public Enterprises.
In the last five years, the country has pursued crucial reforms, including the approval of a hybrid governance model, as well as implementing an online board recruitment system and revising the SOEs’ business plans for relevance and sustainability, he said.
