In this edition, Ambassador Leonard Iipumbu opens up debate by arguing that State Owned Enterprises (SOEs) not operating in line with Vision 2030 are failing to contribute to the development of the economy and not living up the NDP3 expectations, and should therefore, be forced to restructure.
To say that there is need to restructure companies not pleasing the shareholder is to state the obvious. What is however new is that this is the first time such a statement is coming from a parastatal, perhaps motivated by the fact that Agribank has weathered the storm of restructuring.
There was national uproar when Agribank restructured in 2007, at a time when the company had recorded a net loss of N$104million in the year end 2006. The cost to income ratio had been pegged at a shocking 230% two years earlier while loan approvals and disbursement was around N$36million.
Agribank was haemorrhaging the public coffers and its existence was a threat to national development. Companies performing the way Agribank was performing in between 2004 and 2008, worsen the tax burden as they fail to plough back into the economy and national vision, by not paying dividends, or helping finance government projects.
If only Agribank was holding the agricultural sector hostage by its non-performance, what about the rest who have been in the Intensive Care Unit (ICU) for the past decade?
The problem is not about corruption as most people would rush to suggest, it is lack of business direction.
Iipumbu now boasts that companies not in alignment with national goals should be thoroughly forced to restructure - this from an executive who gave his employees 30 days’ notice of retrenchments in 2007. It was only his job which was not vacant.
Positions were made redundant during that restructuring exercise.
The trade unions cried foul as pressure mounted on Iipumbu.
Today Iipumbu boasts about how loan approvals and disbursement have increased by 330% from N$36million in 2005 to N$155 million in 2009 increasing the profit by 50% therefore contributing to growth of the loan book by 32% from N$1 billion to N$1.4 billion during the same period.
Agribank’s case needs to be examined in detail, the important elements of the restructuring program including changing the organisational structure, standardising the work processes to expedite growth, and revamping the corporate culture of the organisation in order to embrace change, reduction in hierarchies to enable faster decision-making and retrenchment of employees to cut costs. The Bank’s case elaborates on the mistakes committed by the previous administration. The organisation is now delivering the desired results and accelerated its initiatives.
This explains why, after the Old Mutual report, only Agribank came out publicly to refute any allegations by the report that the company was under performing.
Many corporates are in deep trouble and have no plans to restructure along national interests.
The corporate environment is muddied with CEOs and MDs who lack the spine to go for broke. There is currently a huge corporate rot as we strive for the attaining of Vision 2030. Vision 2030 is a journey whose course will fail if managers are recycled and enjoy the comfort of lack of pressure. In every National Budget announcement, there is a call for parastatals to reduce reliance on state fiscus. Those calls will not come to fruition if there is no restructuring of parastatals, considering their role in the national economy.
Few parastatals have positioned themselves to be more adaptable to dynamic changes in business environment. There is still a traditional perspective that all is well until people start toy-toying in the streets.
Namibian parastatals should agree on an economic model suitable for the country and the continent, especially in the aftermath of the global economic meltdown, hence the initiatives of executives like Iipumbu need to be commended. PF