Download PEEP A

(PEEPA)
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
presentations
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 Classification
2
PEEPA
presentations
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
PEEPA
presentations
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
4
PEEPA
presentations
Map of the World
 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.
5
PEEPA
presentations
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.
6
PEEPA
presentations
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
7
25.9% in 2009, but still below the longer-term trend level of
close to 40 percent.
PEEPA
presentations
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,
International Monetary Fund (IMF).
according
to
the
 In 2015, Botswana's GDP per Capita at current prices is
expected to be P81,395.00 (US$11,628.00)
8
PEEPA
presentations
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.
9
PEEPA
presentations
PEEPA’S MANDATE
 Advising Government on matters related to privatisation
and subsequent implementation
PEEPA’s  Privatisation Policy for Botswana mandates PEEPA to :
mandate
 Advise Government on appointment of directors of
entails..
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
10
PEEPA
presentations
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)
11
PEEPA
presentations
THE PUBLIC ENTERPRISE (PE)
LANDSCAPE IN BOTSWANA – OWNERSHIP
MODEL
 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.
12
PEEPA
presentations
THE PE LANDSCAPE IN BOTSWANA –
OWNERSHIP MODEL (CONT.)

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
13
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES BY
OWNERSHIP AND CLASSIFICATION
Ministry
Agriculture
Revenue Generating
PEs
Botswana Agricultural Marketing
Board
Botswana Meat Commission
Botswana Vaccine Institute
Banyana (PTY) Ltd
Lands and Housing
Botswana Housing Corporation
Minerals, Energy &
Water Resources
Botswana Power Corporation
Water Utilities Corporation
Non-Revenue
Generating PEs
Botswana College of
Agriculture
National Food Technology
Research Centre
Water Apportionment Board
14
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES BY
OWNERSHIP AND CLASSIFICATIONcontinued
Ministry
Revenue
Generating PEs
Finance and
Development
Planning
Botswana Development
Corporation
Botswana Savings Bank
National Development
Bank
Bank of Botswana
15
Ministry of
Transport &
Communication
s
Air Botswana
Botswana Post
Botswana Railways
Botswana
Telecommunications
Authority
Botswana Telecomms
Non- Revenue Generating PEs
Botswana Privatisation Asset Holdings
Botswana Institute for Development
Policy Analysis
Botswana Stock Exchange
Botswana Unified Revenue Service
Financial Intelligence Agency
International Financial Services Centre
Motor Vehicle Accident Fund
Non-Bank Financial Institutions
Regulatory Authority
Public Enterprises Evaluation and
Privatisation Agency
Public Procurement and Asset Disposal
Board
Selebi Phikwe Economic Diversification
Unit
Statistics Botswana
Civil Aviation Authority
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES BY
OWNERSHIP AND CLASSIFICATIONcontinued
Ministry
Education and Skills
Development
Infrastructure, Science &
Technology
16
Environment, Wildlife &
Tourism
Non-Revenue
Generating PE
Non-Revenue
Generating PE
Botswana Examinations
Council
Botswana College of
Distance and Open Learning
Botswana International
University of Science and
Technology
Tertiary Education Council
Botswana Training Authority
University of Botswana
Botswana Innovation Hub
Botswana Technology
Centre
Rural Industries
Promotions Company
Botswana Tourism
Organisation
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES BY
OWNERSHIP AND CLASSIFICATIONcontinued
Ministry
Revenue Generating
PEs
Trade and Industry
Citizen Entrepreneurial
Development Agency
State President
Non-Revenue Generating
PEs
Botswana Bureau of Standards
Botswana Export Development &
Investment Authority
Competition Authority
Local Enterprise Authority
Botswana National Productivity Centre
17
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES –FULFILING
COMMERCIAL AND NON-COMMERCIAL
OBJECTIVES
 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
18
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES –
CONTRIBUTION TO GDP
19
PEEPA
presentations
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
20 the private sector
PEEPA
presentations
BOTSWANA PUBLIC ENTERPRISES –
BOARD NOMINATION APPROACH
Review and
identification of
Board vacancies –
PEEPA director
database
Advertise for
expression of
interest from
candidates
Induct new
Board members
Screening
submissions from
potential candidates
Solicit feedback
on decision
made to update
PEEPA director
database
21
Recommendations of
candidates to serve
on PE Board
PEEPA
presentations
RATIONALE FOR CURRENT BOARD NOMINATION
APPROACH
 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
22
PEEPA
presentations
BOARD NOMINATION APPROACH - CHALLENGES
 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
23
PEEPA
presentations
PRIVATE ENTITY PERFORMANCE
MONITORING AND EVALUATION
 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
24
PEEPA
presentations
OPPORTUNITIES FOR IMPROVEMENT
 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
25
PEEPA
presentations
CONCLUSIONS

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
26
PEEPA
presentations
THANK YOU
CONTACT DETAILS
Public Enterprises Evaluation and Privatisation Agency
Plot 50370, 2nd Floor, Twin Towers, East Wing
Fairgrounds Office Park
Private Bag 00510
Gaborone
Tel: +(267) 3188807
Fax: +(267) 3188662
Email: [email protected]
www.peepa.co.bw
27
PEEPA
presentations