By Seleoe Nonyane
The minister of finance and development planning Retṧelisitsoe Matlanyane this week revealed that Lesotho’s economy is rapidly deteriorating due to a glaring mismanagement and non-performance of state-owned enterprises.
Speaking at a meeting with representatives of the state-owned enterprises, Matlanyane stated that while some of them have significantly grown while others have shrunk and collapsed.
Matlanyane said as per the Public Financial Management and Accountability Act (PFMAA), it is a requirement that all public enterprises including the SOEs should annually issue financial statement and reports that include plans and forecasts for the next three years to the minister of finance for consolidation and to be presented to the parliament.
However, she stated that this was not happening in the past and the only time that the minister would know on the status of the performance of these organizations is only during the budget speech or when additional financing or recapitalisation is required.
She said years go by without communication, no relationships were made, no feedback on the budget implementation and performance were made.
“Not all entities comply with the requirements, even those that do provide reports, they are often belated.
“These posed challenges for the ministry to make forward looking fiscal risk assessment of the sector and inform fiscal policy and future plans,” she said.
Regarding governance, Matlanyane observed that currently there is no common policy framework for the SOEs nor the legal framework indicating that ownership and oversight arrangements are decentralized.
She said that the Boards comprise largely of government officials and appointees of the minister portfolio therefore, such boards tend to lack independence, objectivity, industry knowledge and specialized skills vital to well-functioning bodies.
“It is at the interest of this administration to follow the International good practices to have SOE boards comprising mainly of independent, non-executive directors drawn from the private sector with the requisite mix of skills, knowledge and experience to effectively oversee the business of the SOE.
“They should be appointed through a well-structured, merit based and transparent process. This will be addressed under the SOEs policy and legal frameworks,” she promised.
For his part, the country director for Institute of Development Management (IDM) ————–said that the challenge of sustainability is that there are no partnerships among SOEs.
He urged that the enterprises should collaborate and find a solid ground in their operations in order to be effective.
Meanwhile, a representative from Lesotho Institute of Accountants (LIA) Rakuoane Joseph Rakuoane talked on the cooperate governance issue highlighting that indeed there will be a problem when there is no knowledge in risk management.
He said that there are knowledgeable candidates who should be allowed space to participate to showcase their skills and knowledge and believed that this will take the country forward.
He added that advertisements for these positions should be made public and correct measures should be followed when accepting candidates.
