February 8, 2005

Government reforms parastatals

Finance Minister Baledzi Gaolathe has proposed a number of reforms to boost the profitability of parastatals. In the budget speech, he acknowledged that some of the public enterprises have done well, but the government requires that parastatals should achieve reasonable returns on the capital they invest. He emphasised that parastatals should become more profitable by improving productivity as opposed to simply increasing tariffs and directly making consumers to pay for their operational costs. In line with efforts to improve productivity in the public sector, Gaolathe said government would continue to restructure parastatals to ensure that they yield positive results. The Privatisation Policy and the revised Incomes Policy would also be implemented to help the state corporations. He said government was paid P229 million in dividends by parastatals that performed well in 2003/2004.

Some of the public enterprises that recorded net profits after previous losses are the Botswana Telecommunications Corporation, the Botswana Agricultural Marketing Board, the Botswana Post and Banyana (Pty) Ltd, Gaolathe told Parliament. All parastatals that are not liable to tax will pay a 25 percent dividend of their profits to government from now onwards. This is expected to yield P121 million per annum at current rates of profitability.

According to Gaolathe, the Botswana Meat Commission (BMC), which continued to make losses, has not matched the good performance of some of the country's parastatals. As a result, government has extended a P63 million guarantee to the BMC for one year until June 2005. Government has also offered the BMC tax remission for 2004/2005-tax year amounting to P16.7 million. BMC is expected sell some of its non- core business and assets, including houses and land to rise cash. Gaolathe said government would engage a consultancy to do the financial restructuring of BMC in 2005 as a permanent solution to address the problems of the ailing parastatal. He said the Citizen Entrepreneurial Development Agency (CEDA) training and mentoring has been revamped and concerted efforts are being made to ensure further improvements despite initial difficulties. Under the new arrangement, CEDA will identify skills and gaps at the pre-appraisal stage of projects with the objective of helping potential investors to refine their ideas and assist them with business plans preparation and other matters critical to establishing business. (Mmegi/The Reporter, Gaborone)


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