A a a PEEPA presentations PUBLIC ENTERPRISES IN BOTSWANA: OWNERSHIP AND GOVERNANCE Presentation to...
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PEEPA presentations PUBLIC ENTERPRISES IN BOTSWANA: OWNERSHIP AND GOVERNANCE Presentation to High Level Meeting of the State Ownership Authorities: state as an owner – ownership policy, execution of state interests and fostering of public-private dialogue Ljubljana, Slovenia 5 - 6 September, 2011 (PEEPA)
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Transcript of A a a PEEPA presentations PUBLIC ENTERPRISES IN BOTSWANA: OWNERSHIP AND GOVERNANCE Presentation to...
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PUBLIC ENTERPRISES IN BOTSWANA: OWNERSHIP AND GOVERNANCE
Presentation to High Level Meeting of the State Ownership Authorities: state as an owner – ownership policy, execution of state
interests and fostering of public-private dialogue
Ljubljana, Slovenia
5 - 6 September, 2011
(PEEPA)
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PRESENTATION OUTLINE
Botswana: History and Geography
Map of the World
Botswana – Political /Administrative Setup
Botswana Economy
Botswana – International Relations
PEEPA’s mandate
Public Entities and Privatisation
The Private Enterprise landscape in Botswana – ownership model
Botswana Public Enterprise by Ownership and Classification2
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PRESENTATION OUTLINE... CONT.
Botswana Public Enterprise – fulfilling commercial and non-commercial objectives
Botswana Public Entities – Contribution to GDP
Botswana Public Enterprises – Board Nominations
Botswana Public Enterprises – Board Nomination Approach
Rationale for Current Board Nomination Approach
Board Nomination Approach – Challenges
Performance Monitoring and Evaluation
Opportunities for improvement
Conclusions 3
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BOTSWANA - HISTORY & GEOGRAPHY
Botswana became Independent on 30th September,1966 after 80 years as a British Protectorate
Botswana is a landlocked, semi-arid country of 582,000 km 2(about the same size as Kenya and France).
It is located in Southern Africa and shares a border with Angola, Zimbabwe, South Africa, Namibia and Zambia. (see map)
The population was estimated at 1.8 million in 2008
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Map of the World
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Botswana is a landlocked, semi-arid country of 582,000 km2 (about the same size as Kenya and France).
It is located in Southern Africa and shares a border with Angola, Zambia, Zimbabwe, South Africa and Namibia.
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BOTSWANA - POLITICAL / ADMINISTRATIVE SET-UP
Constitution of Botswana provides for 3 arms of government:
Legislature- Members of the National Assembly are directly elected from the constituencies.
Judiciary - An independent judiciary with a High Court presided over by the Chief Justice. Subordinate courts are Magistrates’ Courts and Customary Courts
- A Court of Appeal deals with appeals from the High Court.
The Executive- The President is head of the Executive arm of Government and presides over Cabinet. President selects his Ministers from among the members of the National Assembly.
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BOTSWANA - ECONOMY
Economy continued to show signs of steady recovery from the effects of the 2009 global recession.
Gross domestic product (GDP) grew in real terms at an annual rate of 10.8% in the first nine months of 2010, compared to a contraction of 3.7% in 2009.
The main contributor to the turnaround has been mining sector output, which increased by 21.9% compared to a decrease of 27.1% in 2009. Non-mining GDP grew by 6.5% in 2010 compared to 6.2% in 2009
The mining sector accounted for 30.8% of total GDP, up from 25.9% in 2009, but still below the longer-term trend level of close to 40 percent.
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BOTSWANA – ECONOMY cont.
The forecast is that in real terms, the economy will grow by 6.8% in 2011 and 7.1% in 2012
Forecast Total GDP in current prices for the current financial year will be P101.59 billion (US$14.5 billion), followed by P109.5 billion (US$15.7 billion) in 2011/12, and P118.1 billion (US$16.9 billion) in financial year 2012/13.
Botswana GDP per Capita at current prices was reported at P45,874.54 (US$6,533.57) in 2009, according to the International Monetary Fund (IMF).
In 2015, Botswana's GDP per Capita at current prices is expected to be P81,395.00 (US$11,628.00)
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BOTSWANA - INTERNATIONAL RELATIONS
The country is a member of various international organisations, such as:
United Nations World Bank International Monetary Fund World Trade Organisation African Union and regional bodies, such as the Southern
African Customs Union (SACU) and the Southern African Development Community (SADC).
SADC Headquarters located in Gaborone, Botswana.
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PEEPA’s mandate entails..
Advising Government on matters related to privatisation and subsequent implementation
Privatisation Policy for Botswana mandates PEEPA to :
Advise Government on appointment of directors of PEs and monitor their performance.
Review objectives of existing parastatals and set objectives of entities to be commercialised and/or corporatised
Assist Government in setting performance targets of PEs
Monitor performance of PEs in meeting their objectives
PEEPA’S MANDATE
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PES AND PRIVATISATION
Botswana has a National Privatisation Policy – adopted 2000
Aimed at improving service delivery and enhancing efficiencies
Managed by the Ministry of Finance & Development Planning (MFDP)
PEEPA established to implement the Policy
Involves different forms of Privatisation; e.g. Outright Sale, Part Sale, Commercialisation, Restructuring
Some transactions being implemented (e.g. BTC, NDB, mergers)
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Botswana has adopted the decentralised PE Ownership model
PEs belong to different line Ministries who are the shareholders
The line Ministers appoint Boards of Directors of the PEs that report to them
Most of the PEs are established through Acts of Parliament as statutory corporations while some are established as companies through the Companies Act
PEs are set up as autonomous bodies with their own corporate identities, they get policy direction from the line Ministries, based on the National Development Plans (NDP) and Ministry Strategic Plans.
The mandates of PEs are normally spelt out in their establishing documents.
THE PUBLIC ENTERPRISE (PE) LANDSCAPE IN BOTSWANA – OWNERSHIP
MODEL
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PEs submit periodic performance reports to their line Ministries. PEEPA PE review exercises have however, established that oftentimes, PEs are given too much autonomy to set their own targets.
The Governance of PEs is normally provided for in the establishing documents
THE PE LANDSCAPE IN BOTSWANA – OWNERSHIP MODEL (CONT.)
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BOTSWANA PUBLIC ENTERPRISES BY OWNERSHIP AND CLASSIFICATION
Ministry Revenue Generating PEs
Non-Revenue Generating PEs
Agriculture Botswana Agricultural Marketing BoardBotswana Meat CommissionBotswana Vaccine InstituteBanyana (PTY) Ltd
Botswana College of Agriculture
National Food Technology Research Centre
Lands and Housing Botswana Housing Corporation
Minerals, Energy & Water Resources
Botswana Power CorporationWater Utilities Corporation
Water Apportionment Board
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BOTSWANA PUBLIC ENTERPRISES BY OWNERSHIP AND CLASSIFICATION- continued
Ministry Revenue Generating PEs
Non- Revenue Generating PEs
Finance and Development Planning
Botswana Development CorporationBotswana Savings BankNational Development BankBank of Botswana
Botswana Privatisation Asset HoldingsBotswana Institute for Development Policy AnalysisBotswana Stock Exchange Botswana Unified Revenue ServiceFinancial Intelligence Agency International Financial Services CentreMotor Vehicle Accident FundNon-Bank Financial Institutions Regulatory Authority Public Enterprises Evaluation and Privatisation AgencyPublic Procurement and Asset Disposal BoardSelebi Phikwe Economic Diversification UnitStatistics Botswana
Ministry of Transport & Communications
Air Botswana Botswana PostBotswana RailwaysBotswana Telecommunications AuthorityBotswana Telecomms Corporation
Civil Aviation Authority
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BOTSWANA PUBLIC ENTERPRISES BY OWNERSHIP AND CLASSIFICATION- continued
Ministry Non-Revenue Generating PE
Non-Revenue Generating PE
Education and Skills Development
Botswana Examinations CouncilBotswana College of Distance and Open LearningBotswana International University of Science and TechnologyTertiary Education CouncilBotswana Training AuthorityUniversity of Botswana
Infrastructure, Science & Technology
Botswana Innovation Hub Botswana Technology CentreRural Industries Promotions Company
Environment, Wildlife & Tourism
Botswana Tourism Organisation
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BOTSWANA PUBLIC ENTERPRISES BY OWNERSHIP AND CLASSIFICATION- continued
Ministry Revenue Generating PEs
Non-Revenue Generating PEs
Trade and Industry Citizen Entrepreneurial Development Agency
Botswana Bureau of StandardsBotswana Export Development & Investment AuthorityCompetition Authority Local Enterprise Authority
State President Botswana National Productivity Centre
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Some sectors such as Telecommunications have clear policies for Universal Service obligations, while the rest of the sectors are still lagging behind, with no clear policy.
It is therefore common to find PEs with dual mandates, or tasked with carrying out both commercial and non-commercial activities.
PEs are treated as arms of government therefore required to fulfil developmental role of government
As part of the broader Corporate Governance Framework, PEEPA is advocating for the adoption of a PE ownership Policy in Botswana and performance contracting between PEs and the Shareholder (Government) which should spell out the obligations of both parties, including how social obligations would be financed.
Line ministries operate as owners and regulators of PEs
BOTSWANA PUBLIC ENTERPRISES –FULFILING COMMERCIAL AND NON-COMMERCIAL OBJECTIVES
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BOTSWANA PUBLIC ENTERPRISES –CONTRIBUTION TO GDP
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BOTSWANA PUBLIC ENTERPRISES– BOARD NOMINATIONS
Board compositions are provided for in the establishing Acts/ Constitutions.
Ministers usually appoint senior Ministry officials to serve on the Boards of PEs falling under their portfolio.
Following the approval of the Privatisation Policy of Botswana of 2000, Ministries are now required to seek the assistance of PEEPA in identifying candidates to be considered for Boards of PEs
There is provision for candidates from the private sector to be appointed to PE boards to bring private sector expertise
As a result there has been an increase of board members from the private sector
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BOTSWANA PUBLIC ENTERPRISES –BOARD NOMINATION APPROACH
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The board nomination process is intended to:
Introduce a transparent merit based director selection process
Achieve a balanced board with respect to expertise and skills
Identify and reduce risk of nominating members who may be over committed
Identify potential conflict of interest
Achieve continuity in the Board functioning by staggering Board Membership tenure
Promotes good corporate governance
RATIONALE FOR CURRENT BOARD NOMINATION APPROACH
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Identified challenges include:
Adoption of transparent merit based board nomination process not mandatory
Restrictive provisions in some constitutive documents on Board Membership
Appointment of public servants not based on transparent merit based approach
Adherence to good Corporate Governance principles generally not enforced
Lack of Board performance evaluation
BOARD NOMINATION APPROACH - CHALLENGES
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Principal approach has been through annual PE Performance reviews, aimed at:
establishing alignment of PE’s strategy with developmental expectations, plans and sector policies
determining achievement of PEs developmental objectives and resultant impact
assessing adequacy of resourcing and internal resource utilisation
evaluating long term financial sustainability of PE
evaluating adoption of good corporate governance practices
Assessing opportunities for private sector participation
PRIVATE ENTITY PERFORMANCE MONITORING AND EVALUATION
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Adoption of Corporate Governance Framework by PEs
Adoption of Botswana Corporate Governance Code
Managing Commercial VS developmental roles
Adoption of an over-arching PE ownership policy
OPPORTUNITIES FOR IMPROVEMENT
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Ownership model requires improvement
Need to separate regulation from ownership
Develop a clear PE ownership policy
Promote private sector participation for efficiency enhancement
Continue to increase Board Members from the Private Sector
There are many lessons to be learnt from other regions
CONCLUSIONS
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THANK YOU
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Public Enterprises Evaluation and Privatisation AgencyPlot 50370, 2nd Floor, Twin Towers, East WingFairgrounds Office ParkPrivate Bag 00510Gaborone
Tel: +(267) 3188807Fax: +(267) 3188662Email: [email protected]
www.peepa.co.bw
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