Performance Monitoring of Public Enterprises

Project description

Title: Performance Monitoring of Public Enterprises
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Namibia
Lead executing agency: Ministry of Public Enterprises (MPE)
Overall term: 2019 to 2021

GIZ2019_PMPE_Namibia_02

Context

With an estimated per capita GDP of approximately EUR 4,550 (2016), Namibia is classified as a middle-income country. In recent years however, economic growth has slowed and government interventions have heavily been restricted due to a large budget deficit. Namibia has appeared in the lower ranks of the World Bank's 2018 Ease of Doing Business Ranking, listed as 106th out of 190 and 90th of 137 in the Global Competitiveness Index 2017-2018, while in the 2016 Human Development Index, Namibia ranked 126th.

Namibia aspires to become an industrialised nation by 2030 through the national development framework, Vision 2030. This framework is supported by the National Development Plan 5 (NDP 5), which serves as the nation’s blueprint for national development. The Ministry of Public Enterprises (MPE) plays a decisive role in achieving the development plan’s objectives, as they are responsible for most of the country’s physical infrastructure and operate in key areas. 

The MPE was founded in 2015 in the wake of the Public Enterprises Governance Amendment Act of the same year. In 2016, the Hybrid Governance Model was introduced which divides public enterprises into three categories: (1) commercial public enterprises; (2) non-commercial public enterprises; and (3) extra-budgetary funds/financial institutions. Thus, the MPE exercises legal rights of ownership, albeit to date with restricted powers. For the most part, however, the adoption of the Public Enterprises Governance Act 2019is intended to eliminate these restrictions. 

The Public Enterprises Governance Act strengthens the MPE's mandate, which enables it to initiate and implement reform processes for Commercial Public Enterprises (CPE). The MPE is required to develop regulations and guidelines as a basis for cascading performance agreements between the MPE and the supervisory boards of CPE’s and also – based on this – performance agreements between the respective supervisory and management boards. The latter agreements are concerned with the regular development, submission and follow-up of annual plans and audited annual statements for the Commercial Public Enterprises. 

Objective

The Governance of selected Commercial Public Enterprises is improved.

Approach

The GIZ Technical Cooperation programme ‘Performance Monitoring of Public Enterprises’ (PMPE) complements the development cooperation between Namibia and Germany in the priority area of sustainable economic development. The objective of PMPE is to assist the MPE to develop and implement improved basic governance conditions based on the Public Enterprises Governance Act 2019. 

Through the Ministry of Public Enterprises, the PMPE project will reach the 21 Commercial Public Enterprises under MPE oversight that act as an intermediary for the two indirect target groups: (1) Namibian private sector enterprises and (2) the 2.4 million Namibians. Companies and the general public use the supplies and services the various Public Enterprises provide, meaning they are both directly affected by their availability, affordability and quality.

According to the World Bank, more than two thirds of Namibians have to get by on less than 5.50 USD a day, and nearly half with less than 3.20 USD a day. Around one quarter of the population lives in extreme poverty. Given that a government spending policy geared to poverty reduction competes directly with the subsidy requirements of loss-making public enterprises, reforms dedicated to reducing the level of subsidisation can indirectly benefit poorer population groups.

The project is arranged into three fields of activity to achieve this objective:

  • It aims to assist the Ministry of Public Enterprises to develop and implement improved basic governance conditions based on the Public Enterprises Governance Act 2019. To this end, the line ministries will transfer responsibility and ownership rights for the group of Commercial Public Enterprises over to the MPE.
  • It aims to develop an information system for monitoring the performance of Commercial Public Enterprises. This system shall generate all the information and provide all the relevant functions required for monitoring and overseeing CPEs. The system will be piloted in five selected CPEs in order to check its expediency, user friendliness and to align it where necessary. The MPE as well as the supervisory and management boards of Commercial Public Enterprises will not be able to execute their respective Public Enterprises governance responsibilities if they do not have an effective information system in place.
  • It helps strengthen relevant actors' abilities to make consistent and full use of the information system, as this will lead to better assessments of Commercial Public Enterprises' performance capacity. By leveraging the information provided through this system, the actors will be empowered to improve their governance of PEs. A central criterion here is to ensure that the MPE has enough HR, financial and management resources to apply the performance monitoring information system.
GIZ2019_PMPE_Namibia

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