Statutory Corporations Thriving – Simbani:

The Department of Statutory Corporations, domiciled in the Office of the President and Cabinet and established in 1982, has made tremendous strides even to be recognized as making some notable contribution towards government efforts to raise the much needed revenue for Malawi’s development.

The Comptroller of Statutory Corporations, Peter Simbani, explains in this exclusive interview with Denis Mzembe, the state of affairs:

Excerpts:

Question: May you please introduce yourself?

Answer: My name is Peter Simbani. I am the Comptroller of Statutory Corporations.

Q: What is the nature of the Department of Statutory Corporations?

A: The Department of Statutory Corporations is a department within the Office of the President and Cabinet. It was created by a presidential decree issued by the first president of the Republic of Malawi, Ngwazi Dr. H. Kamuzu Banda in 1982. At the time he decided to create this office within his own office so that it can oversee and manage statutory corporations as government entities and institutions created to offer specific services to the public that the civil service can not render. So you had institutions like Admarc, Air Malawi, MBC among others at the time. So it was imperative to establish an office within the OPC so it could oversee the management of these institutions including issues of governance and financial operations. So that’s the mandate that we have.

Q: How many such statutory corporations are currently there?

A: There are about eighty of them and they are divided into three categories:                              1- We have fully subverted ones. These are those institutions created by government through an act of parliament to offer specific services and they get 100%funding from government.                                      2- Then we have those institutions that were created but get part of their funding from government and they are also able to generate their own revenues. These are what we call partial subvented organizations. For these semi-subvented ones we have institutions like public universities. They get some of their revenue from fees but they are also able to get resources from government.

3- And then we have commercial entities. These are mainly companies that are created under the companies act. These were created so they can generate revenues, generate and realize profits and pay to government. We have companies like Admarc, Escom, Egenco, Airport Developments Limited, Air Cargo Limited and others. All being commercial entities.

Those are the three categories of parastatal organizations.

Q: Which ones are the best and least performing?

A: In terms of the best performing considering the three categories there are some of the commercial entities that are doing really fine that they are making profits and giving to government a dividend of the surplus. I have in mind Umodzi Holdings Limited, the one that is managing BICC including the President Hotel including the Villas. Then we have companies like ADL, ACL, LIHACO. These too are making profits. Then we have regulating institutions like MACRA, Egenco which is generating and selling power. But among the companies that are those that are not making profits for various reasons like Escom because they are owed a lot of money by other institutions which is affecting their balance sheets. We have the water boards which are also not doing fine. Currently they have a very high rate of non-revenue water and the one that tops the list is Blantyre Water Board because from the water that they pump they are only getting 50% of the revenue. That is a huge cost. Because of that they can not make any profit. And Blantyre, being what it is the water board has to pump water from very low level like Walkers Ferry uphill to Blantyre. And because of the topography of the area they have to keep the engines running all the time so they have a huge electricity bill which affects their balance sheets.

And this non-revenue is due to aging pipes which are always bursting and a lot of

For each statutory corporation we have a board and for each board we have the Key Performance Indicators (KPIs) which form the basis for assessment in terms of performance and apart from the boards, we also have KPIs for management. So management has to report to the boards every quarter. So we have quarterly reports and meetings in terms of performance of the institutions.

Q: What criteria do you use to select and appoint members of the various boards?

A: In terms of the criteria for choosing board members we are guided by the legal instruments that created the particular institution. If it is by an act of parliament normally it says there shall be a board and also discusses the position of the board that there shall be an accountant, and a lawyer. But as we do so we also make sure that there are also some other issues to observe like gender balance. Currently we look at the 60-40 percent gender between male and female. So when boards are being reconstituted we make sure that there is a good representation of women on the board. We also look at the regional representation because we don’t need a board that is full of people from one place,same district or same region. There has to be a good balance. So those are issues that we try to emphasize and also competencies that are outlined in the legal instruments that were created for the boards.

Q: What have been some of the successes and challenges so far?

A: If you look at the successes basically you are looking at the mandate of the Department. Why do we exist? Have we been able to achieve what the department was created for? Now the answer lies in the way that the institutions are performing. If more and more are turning the page and making profits to me that becomes a success story. If more companies are coming out making losses and are now making profits that’s a success story. If more and more are now practicing good corporate governance that also becomes a success story for me. So if you look at these 80 or so parastatals you can see that the number of institutions that are now beginning to appreciate and are beginning to adhere to good corporate governance is increasing so that is a success story for me. The challenges are there because for us to do this work we need a lot of financial support. Funding is a problem and we don’t have enough vehicles to enable us to go out and do the monitoring that we are supposed to be doing. So those are the challenges that we are facing as a department.

Q: How much in terms of revenue do statutory corporations contribute towards government efforts to collect adequate revenue?

A: At the moment I may not give you a correct figure but the minister of Finance recently disclosed how much is coming from the parastals. So the fact the Minister of Finance has started recognizing the contribution that the parastals are contributing in his budget statement to me is a good indication that parastals are now making a significant contribution not that big but they have started to contribute to the national budget because in the past there was nothing that was worth reporting to parliament. But this time around the Minister just mentioned a figure of how much is going to come from the parastatal sector. So there is an expectation that that figure will be increasing every year because as more and more profits are being realized they will be paid to government as the main shareholder.

Q: How do you relate to the transport sector and the Ministry of Transport and Public Works in particular?

A: The relationship comes in because we have parastals that are based in the transport sector like we have the three companies at the airport namely ADL, ACL, LIHACO and apart from that we have the Civil Aviation Authority which is a parastatal in the transport sector. Then we have Roads Authority which is a parastatal in the transport sector. And of course we have the Road Fund Administration which is mostly linked to the Ministry of Finance because it mostly deals with money. But RA, LIHACO, ACL and ADL. These are transport related institutions and above them we have the Ministry of Transport and Public Works which is the line Ministry and, therefore, these parastals have to work with us as the institution that was created to coordinate. So, that’s how we find our way to coordinate with the Ministry of Transport and Public Works regarding parastals in the transport sector.

Q: What is the current state of the defunct Malawi Development Corporation (MDC)?

A: MDC is coming back and it has already been registered as Malawi Development Corporation Holdings Limited (MDCHL). So under it will be several other companies. It is going to have other subsidiary companies including Malawi Mining Investment Company which has also been established and a subsidiary of MDCHL.

Q: What are your thoughts regarding the termination of the shipping concessions between government and Mota-Engil recently?

A: As you are aware government had given Mota-Engil a concession to run Malawi Lake Services and manage the ships on Lake Malawi. But government has decided to terminate the concession agreement and in my understanding government is going to create its own company that is going to run lake services. Once that happens it means that a company has to be formed just like many other companies that government has formed with the department of Marine as the policy holder.

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