The Auditor General (AG), Timothy Matsebula, reported that an analysis of the financial performance of the fund over a period of five years (financial years 2019 to 2023), revealed that the public enterprise has continually been incurring significant losses of E443 388 223 over that period.
This is contained in the Public Accounts Committee’s Recommendations on the Auditor General’s Financial Audit Reports on Government Accounts for the Financial Years ended on March 31, 2022 and 2023.
The Ministry of Finance appeared before the Public Accounts Committee (PAC) in Parliament yesterday.
On a separate but similar query, the AG reported that an analysis of the financial performance of Category A Public Enterprises over a period of five years, financial years 2019 to 2023, revealed that some of the public enterprises have continually been incurring significant losses.
Performance
He revealed that the expectation is that well-managed public enterprises should at least be able to break even (make adequate income to cater for all operating expenses) and further be able to develop and effectively implement turnaround strategies that would improve their financial performance and position.
Acting Director in the Public Enterprise Unit (PEU) Primrose Dlamini, submitted that they are currently working on reviewing the PEU Act and they are looking at introducing a specific tool that will ensure the monitoring of the public enterprises.
She said it was still a work in progress and they had incorporated all the concerns raised through the queries in the review exercise.
“We did not have a specific tool that we use to monitor the public enterprises but we have included that in the ongoing exercise of reviewing the Act. It will be a standard that will guide every officer in the department,” she said.
She submitted that with SMVAF, they were specific in that they requested the entity to submit its strategies on how it could enhance its performance. She explained that parastatals are currently working on reviewing their strategy.
She detailed that what emerged was that previously, the entity was quick to attend to road accidents and make payments without thorough assessment, hence the losses; but they had to change their strategy.
Backlog
Contained in the AG’s report is that the controlling officer submitted that the poor financial position was as a result of an accumulated backlog of claims which had not been paid since 2011.
When the fund introduced the seamless strategy to shorten the claiming period, payments shot up and exhausted the available funds, yet on the other hand, the fuel levy they were sourcing their revenue from could no longer cope with the demand.
To address this, the SMVAF has suggested that the fuel levy be reviewed on an annual basis and save costs by diversifying some of its services. The ministry has also proposed to government that fines from traffic offences should now be collected directly by the SMVAF.
The controlling officer was urged to engage the parastatal to come up with other strategies to fund the deficit and also remind the parastatal of its mandate as it seems that some of the funds are used to finance other projects not in line with the mandate of the public enterprise.
Appropriate
Meanwhile, the AG reported that the ministry was not adequately monitoring, managing and engaging line ministries of Category A public enterprises (parastatals) and their related Boards of directors to ensure that they declare and remit appropriate amounts of dividends on their after-tax profits as per the Dividend Policy.
Accordingly, the companies were expected to declare and remit dividends in the range of E47 729.95 to E93 424 518 of their annual revenue after-tax profits.
The AG highlighted that the issue of dividend declaration was not included in the notes to the financial statement of the parastatals which implies that the decision not to declare was not approved by the minister for Finance but was rather the sole discretion of the boards.
Further noted was that the Eswatini Electricity Company (EEC), Eswatini Savings and Development Bank, FINCORP, Eswatini Investment Development Company (EIDC) and Eswatini Railways were the only government companies remitting dividends.
Through the AG’s report, the controlling officer submitted that the issue of dividends is complicated as it depends on profitability, cash-flows and investments.
He mentioned though that, according to the ministry’s understanding, dividends do not always have to be in the form of cash to the shareholder (government) but can include service delivery and employment of the country’s citizens.
Declaration
He, however, revealed that the ministry has written to the different government companies to include dividend declaration in their reporting immediately after approving audited financial statements.
On a separate query, the AG reported that public enterprises operating in the regulatory and developmental category were not declaring and paying dividends or special dividends to government even though they were operating at full strength and realising significant profits.
Total profits realised by these public enterprises over a five-year period amounted to E220 474 343 as detailed by the AG.
“Even though discretion for declaring the dividends was left to the boards, the policy emphasises that those entities operating at full strength and realising profits have to pay dividends or special dividend,” stated the AG.
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