MBABANE – While government spends over E2 billion each financial year as subvention to State-owned enterprises (SOEs), a bigger chunk of the money goes to the payment of salaries for their employees.
In fact, an analysis by this publication can reveal that several SOEs spend 80 per cent of their subvention on salaries.
Currently, the Government of the Kingdom of Eswatini has about 49 SOEs under its wing and they were set up to guide government’s investment in strategic and public-oriented services, which include communications, social amenities, energy and many more.
These sectors relate to areas considered to fall under the public sector management of State resources and assets.
They are basically an expression of harnessing output from resources that ordinarily are considered the legacy of the people as a policy.
The role of SOEs is further defined in relation to the services critical to public welfare with the assumption that public interest is best served by centralised interventions.
Government reportedly started dishing out allocations for the SOEs in the 2011/2012 financial year.
The analysis by this publication is based on findings made by the Office of the Auditor General in the Compliance Audit Report of the SOEs.
The report has been tabled in Parliament and is yet to be debated, which means that its content remains allegations.
Forming part of the list of SOEs which spend a higher percentage of their subvention on salaries is the National Maize Corporation (NMC).
In the audit report, the AG said he noted that the statement of financial performance showed an increase in the employee costs of E2 124 329 from E10 871 966 (financial year 2023) to E12 996 295 as at March 31, 2024, despite the decrease in government subvention.
The AG said the Eswatini Government provided the programme with a subvention of E14 692 192 which showed a decrease of E1 578 741 from E16 270 933 as at March 31, 2023.
This means that 88 per cent of the subvention from Eswatini Government is spent on employee costs and only 12 per cent is spent on operational costs.
“I am concerned that the investment made by the Eswatini Government is spent mainly on employee costs instead of it being spent towards achieving the objectives of the project. I advised management to provide with supporting documents the explanation for this increase in employee costs. I further advised management to provide strategies on how to control this cost,” the AG said in his report.
In response, the AG said the management stated that the hike in employee costs emanated from the alignment of personnel costs for 21 tractor pool coordinators and eight motor mechanics who were hired by the Government of Eswatini to NMC’s payroll structure which incorporate added benefits such as medical aid, housing allowances and gratuity as well as the cost-of-living adjustment (COLA) of four per cent which was effected in the 2023/2024 financial year.
Matsebula said the controlling officer did not provide supporting evidence for the alignment of the personnel costs and the costs of the added benefits added such as the medical aid, housing allowances and gratuity.
Another entity which forms part of those spending more on staff costs is the Eswatini National Trust Commission (ENTC).
The AG said he noted from the statement of comprehensive income that the commission incurred high staff costs amounting to E17 941 861 which is E1 422 682 exceeded the appropriated government subvention of E16 519 179 in the financial year ended March 31, 2023. Likewise, the AG said, in the previous financial year 2022, the commission incurred high staff costs amounting to E18 420 245 which was E672 300 above the appropriated government subvention of E17 777 945.
“This indicates a budget deficit (being over budget) which will result in the commission’s failure to finance its operations. I am concerned that the high staff costs may lead to a strain on financial resources, potentially affecting the ability to invest in other areas of capital improvements,” reads part of the AG’s report.
He said he advised management to provide strategies for reducing the high wage bill and other costs without compromising the mandate of the commission.
In response, he said the management stated that a restructuring exercise commenced in November 2024 and is expected to assist ENTC in reducing the wage bill.
The organisation operates several business units – Mantenga Lodge Restaurant & Bar; Magadzavane Lodge Restaurant & Bar; and Malolotja Lodge Restaurant & Bar – which fund their own wage bills and are not reliant on the government subvention.
“The concerns and advice are noted, and corrective measures are underway. The response states that several business units fund their wage bill and that they were not paid through the government subvention. However, the availed information shows that all the business units of ENTC are operating at a loss, which means eventually, they will also be leaning on the government subvention,” said Matsebula.
He also said: “Hence the unaudited financial statements for 2024 show that staff costs have continued to increase from E17 941 861 in 2023 to E18 778 176 in 2024, indicating a persistent upward trend in wage expenditure.
The restructuring efforts have not yet yielded tangible reductions in staff costs. Until the restructuring is fully implemented, its impact measured and ongoing wage monitoring established, the risk from rising staff costs remains”.
The Royal Science and Technology Park (RSTP) is also having challenges in terms of its wage bill.
The AG uncovered that its wage bill was significantly high as salaries and wages amounted to E82 940 202, consuming 83 per cent of the subvention grant income of E100 303 884.
This left only E17 363 682 (17 per cent) to finance the operations and liabilities.
The observation was also noted in the audit for the Ezulwini Town Council whereby the AG reported that the employee costs significantly increased by E2 016 955 (21.9 per cent), from E9 208 421 in the financial year ended March 31, 2023 to E11 225 376 in the financial year ended March 31, 2024.
This was noted alongside a subvention grant income increase of E3 102 631 (31.9 per cent), from E9 704 663 in the previous year to E12 807 294 in the financial year ended March 31, 2024.
Matsebula said he warned the controlling officer that significantly high employee costs may reduce the availability of funds for other essential services, affect the financial sustainability of the town board and limit its capacity to deliver on its core mandate.
He said he advised the controlling officer to provide justification and documentary evidence for the notable increase in employee costs and demonstrate the value added to the town board’s operations.
Full article available in our publication.
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