Have reforms eluded parastatals?

During consultations by the now dissolved Public Service Reforms chaired by Vice-President Saulos Chilima, one area of concern was the performance of State enterprises or parastatals.

Whereas some State enterprises are performing well and, at the end of the year, give dividends to their shareholder, the Malawi Government, many others have remained perennial sick babies on life support machine. They bank on government bailouts for survival.

Political interference in the recruitment of top bosses of parastatals, especially chief executive officers (CEOs) or director generals (DGs) and, in some cases, their deputies, as well as hiring of boards of directors have been mentioned as some of the contributing factors to poor performance of State enterprises.

Except for a few who attended interviews that were transparently advertised for the jobs they hold, a majority of CEOs and DGs in State enterprises are hand-picked largely based on how deep the colour of their political blood is in relation to the political party in power.

If parastatals are to improve in terms of performance, it should start with radical changes in the manner their executive management and boards are engaged.

In other words, there should be open and competitive recruitment for DGs or CEOs of State enterprises. There are so many qualified and innovative Malawians among the 17 million people. Unfortunately, most of them have no opportunity to contribute to the economic development of the country simply because they are not politically correct or connected.

Previously, I had noted that CEOs for parastatals such as the Electricity Supply Corporation of Malawi (Escom) and the five water boards are openly advertised. Ironically, the same government, in most cases through the head of the Executive—the President, of course, backed by some laws, hand picks officers to similar positions in other State-owned ventures. Why the double standards?

Hand-picked political cronies are the reason many State-owned enterprises or parastatals are performing poorly because such appointees, despite having relevant qualifications, see their role as first and foremost to please the appointing authority? In raw terms, they have to lick the boots of the hiring authorities at the expense of efficient service delivery.

My take is that in the reforms era, parastatal CEOs and DGs should be hired on merit, given targets and goals to achieve if we are to move forward. Renewal of their contracts should be based on a review of their performance against set indicators and done by independent agencies.

In corporate governance, boards of directors are supposed to be the stewards of the shareholders. The boards make decisions on behalf of and in the interest of the shareholder and they are accountable to the shareholders. Membership of boards of State enterprises should not be restricted to political affiliation, expertise should be included. After all, all Malawians, regardless of political affiliation, pay taxes. There has been little or no talk about corporate governance related to public enterprises over the years.

Many advocates of improved corporate governance argue for separation of powers and transparency. They suggest that posts of CEO and board chairperson should not be held by one individual because such an arrangement is not healthy as it concentrates power in one individual, leading to poor corporate performance in most cases.

There are many misconceptions regarding corporate governance. In a nutshell, corporate governance should go beyond issues of disclosure to improve decision-making in business enterprises and make the boards accountable for their decisions.

In the era of public service reforms, it is high time government embraced corporate governance in all of its enterprises if, as a shareholder, it is to realise its worthy instead of forever subsidising most of them.

In their spirit, the public service reforms seek to create benchmarks through which performance in the sector can be measured. Recruitment, on merit, should be one of the factors. In most of the reforms approved by the Executive for the parastatals, I have not seen something closer to this.

Unfortunately, despite “embracing” the public sector reforms, we do not seem, as a country, to be implementing them in their letter and spirit. If the reforms were fully accepted by authorities, surely we could avoid situations like we experienced last week where Escom CEO Evelyn Mwapasa was just removed from her position and replaced with Dr Allexon Chiwaya, without any explanation.

The public deserves better. Mwapasa has been moved to another institution, but reasons for the change are not known. Authorities should not hide behind “prerogatives” to change people in such top jobs like nappies.

Besides the Escom changes, there are several other top jobs in the public sector where CEOs and DGs are changed willy-nilly, in some cases based on pure gossip. We cannot move forward like this. n