Performance of Namibian SoE’s

A Corporate Governance Perspective

Daniel Motinga FNB Group Economics

    Aligning broad stakeholder interest Ensure that firms are run to the benefit of all stakeholders Relationship btw internal governance and society’s conception of corporate social accountability Ultimately to overcome problems of agency in terms of the separation of ownership and control

Corporate Governance Defined

• Strategy • Direction • vision Leadership Openness • Disclosure • Financial and non-financial aspects • Risk aware • Active risk management Sustainability

King III Perspective on Corp Gov

    Integrated annual report ◦ Focus on economic, environment and social spheres Audit committees Internal Audit Formal risk management processes

New King III Requirements

Latest Annual Report or Audited Financial Statements by July 2010

2009 2008,5 2008 2007,5 2007 2006,5 2006 2005,5 2005 1985 1990 1995 2000 2005

Year started Timely disclosure a challenge for SoE’s – no consequences

2010

Tax payer support increased

    Disclosure of annual financial information ◦ Operational efficiency ◦ ◦ Openness and transparency Timely disclosure on all material matters Board selection and value add ◦ Contribution to strategic direction Dependence on tax payer support ◦ Operational sustainability ◦ Going concern status Ready for Risk based management ◦ Do we have the right skills?

Key unresolved issues

   Disclosure should become non-negotiable ◦ Accountability and transparency ◦ ◦ ◦ Timely, regular and reliable Financial, environmental and social (triple bottom-line) Independence of board of directors ◦ Management and political control Balanced private & public enterprise ◦ Identify winners and losers Net contribution to total economy

Food for thought

   Size of board and intensity positively impacts performance ◦ Range of expertise/ merit appointments ◦ Less dominance by CEO Board meeting frequency does not necessarily enhance performance ◦ Higher frequency implies crisis Audit committee characteristics are supportive of performance ◦ Presence of AC serves as an assurance mechanism to promote fairness and transparency ◦ ◦ Independence of an audit comm’t not significant in performance enhancement Frequency of audit comm’t meetings has a positive and significant impact on performance

Cross Country Research Support (SA, Ghana, Nigeria, Kenya) – Jour St Ec & Econometrics, 2008.