MIXED FORTUNES FOR MAJOR PARASTATALS IN 2020

MBABANE – While there are calls to merge some parastatals, especially those which are mainly regulatory in nature; the ones which are profit-making have had mixed fortunes in the past year.

A closer look at some of the major parastatals, especially the profit-making ones, does not paint a rosy picture. 

This is based on their 2019/20 financial results covering the period ending March 31 last year.

An analyst, on condition of anonymity, said merging of the other State-owned enterprising performing almost similar duties could help in  saving millions of Emalangeni that could be diverted into other income-generating projects.

The Central Bank of Eswatini (CBE) made a loss of E177.6 million in the 2019/20 financial year, a complete shift from the E190.1 million profit registered the previous financial year. The credit impairment losses were said to be the major contributors to the loss incurred.

Impairments

EswatiniBank recorded a loss of E64.191 million in the financial year under review and the slump was attributed mainly to COVID-19-related impairments. 

According to the bank’s abridged financial statements, the impairments amounted to E102.373 million and they comprised COVID-19 relief of E30.418 million; gross domestic product (GDP) contraction impact of E55.607 million and normal loan impairments totalling E16.348 million.

Meanwhile, despite not being granted a tariff increase and the stagnant Eswatini economy, Eswatini Electricity Company (EEC) net profit for the year under review was recorded at E438 million compared to E650 million in 2019.

For the Eswatini Water Services Corporations (EWSC) profit for the year amounted to E26.7 million. The figures were at E25.7 million in the previous year.

When it came to the Eswatini Royal Insurance Corporations (ESRIC) profit for the year was said to be over E157.52 million.

This publication had reported yesterday that parastatals, which are also known as State-owned enterprises (SOEs), were believed to be one of the largest drains to government’s coffers alongside the wage Bill. 

In December, government announced that it had undertaken a study to merge and or abolish some of them. 

This decision by government was also articulated in the National Development Plan (NDP) 2019/20 -2021/22. The NDP was tabled in Parliament by the Minister of Economic Planning and Development, Dr Thambo Gina, on February 12, 2020. 

When tabling the plan, under Strategy four of the NDP, government relayed that it would review parastatals with a plan to decrease subventions and increase dividends.

Intervention

The intervention was set to have a comprehensive review of all parastatals and to investigate the effectiveness and efficiency of State-owned entities in achieving outcomes. 

Consequently, Cabinet, through Circular No. 4 of 2020, called upon the suspension of establishment of new entities, amendment of legislation, acquisition and construction of new structures by all Category A public enterprises. 

According to the communication, the implementation of the circular was with immediate effect. The memorandum is dated December 21, 2020 and was addressed to all principal secretaries (PSs). 

It states that Cabinet, through Cabinet minute CM 9084, approved the use of Eswatini Economic Policy Analysis and Research Centre (ESEPARC) services to carry out the study to streamline, strengthen governance and improve performance of SOEs in Eswatini.

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