MBABANE – Eleven public enterprises continue to operate under severe financial strain, evidenced by recurring net deficits, negative accumulated funds and depleted shareholder investments amounting to E2 769 390 479.
The net deficits highlight a growing fiscal risk highlighting the urgent need for strengthened financial oversight, cost control and targeted restructuring within the public enterprise sector.
This is depicted in the Compliance Audit Report on Local Government Authorities and Public Enterprises for the financial year ended March 31, 2024, tabled by Minister for Finance, Neal Rijkenberg, in Parliament yesterday.
The report reflects that although some entities recorded improvements in some years, the persistence of deficits has eroded net asset values and increased reliance on government support.
The report, which was compiled by the Auditor General (AG), Timothy Matsebula, reflects that in the financial year ended March 31, 2024, government paid recurrent subvention grants amounting to E4.9 billion.
The Eswatini Civil Aviation Authority (ESWACAA) alone accounts for E1 712 183 896 of the net deficits and the University of Eswatini accounts for E527 245 639.
The Royal Science and Technology Park accounts for E294 772 193 of the deficits and the enterprise with the least net deficit is Sebenta National Institute with E643 115 net deficit.
The audit review of Financial Statements for the years ended March 31, 2023 and 2024 revealed significant financial, compliance and governance challenges across public enterprises.
Several entities are experiencing severe liquidity constraints, which have undermined their ability to meet operational costs and deliver on their mandates. Misstatements in financial statements were observed, including the recognition of unsupported government grant receivables that do not meet the criteria for receivables (fictitious receivables).
*…
NMC E6m fruitless expenditure due to legal claims
MBABANE – The National Maize Corporation (NMC) incurred a significant financial loss of E6 175 000 arising from a breach of contract and inadequate legal guidance.
According to the AG’s report, the underlying cause was NMC’s failure to adhere to contract terms in 2017, which led to legal claims.
The AG explained that the prolonged litigation and eventual settlement constitute fruitless and wasteful expenditure, as the financial loss could have been avoided through proper contract management and adherence to agreed terms.
According to the report, NMC is facing a legal claim of E863 718 from the former Chief Financial Officer (CFO) over the non-renewal of her employment contract.
*…
Financial management challenges in Pigg’s Peak
MBABANE – The audit of Pigg’s Peak Town Council revealed significant governance and financial management challenges, amounting to material risks to public funds and service delivery.
Key issues included unjustified payments to management and staff, unaccounted or delayed remittance of auction proceeds, noncompliance with statutory rental collection and lease agreements and provision of loans without formal policies or controls.
Several payments, including entertainment allowances, private security and transport allowances, were made without proper authorisation or supporting documentation, creating opportunities for financial mismanagement as depicted in the Compliance Audit Report on Local Government Authorities and Public Enterprises for the financial year ended March 31, 2024.
Non-remittance of E75m PAYE deductions
MBABANE – The audit review of financial statements identified substantial arrears amounting to E75 296 829.32 in the remittance of pay-as-you-earn (PAYE) deductions.
This anomaly was carried out by several public enterprises, signalling both cash flow constraints and non-compliance with statutory requirements.
The AG revealed that continued withholding of these funds not only violates tax legislation, but also attracts penalties and interest, undermines government revenue mobilisation and raises concerns over governance and financial discipline within the affected institutions.
The AG also discovered that several public enterprises have failed to remit employee and employer contributions in respect of provident and pension funds, despite making payroll deductions. He said the continued failure to remit these deductions deprives employees of their retirement benefits, attracts penalties and interest and exposes the institutions to reputational and legal risks. “Management should be held accountable and the overseeing ministries should take immediate steps to address the delays in remittance.
*Full article available in our publication.
Leave a comment