By: Kebba AF Touray
The Minister for Petroleum and Energy Abdoulie Jobe, on Monday 19th December 2022, tabled the State-Owned Enterprises (SOE) Bill 2022, to address the identified challenges of the Enterprise Act and this will result to repealing the SOE Act of 1990, and the establishment of the SOE Commission.
Tabling the said bill before lawmakers, Minister Jobe explained that one of the critical reform agenda and action plan recommended, was to carry out a review of the legal and regulatory framework for the ownership, governance, financial and operational oversight of SOEs. He cited that some of the challenges identified in the current legal framework include an institutional vacuum in terms of Government oversight, following the closure of the Gambia Divestiture Agency in 2009, and a need to strengthen the legal mandate, with emphasis on the role and function of an SOE oversight institution.
The challenges he cited also include ensuring compliance by SOEs with reporting requirements and obligations, inadequate composition, selection process, lack of accountability of SOE Board of Directors and lack of sanctions for non-compliance to legal and regulatory frameworks.
He said since the closure of the Gambia Divestiture Agency (GDA) in 2009, there has been minimal emphasis on SOE reform or on monitoring the performance of the sector. That the Public Enterprises (PE) Act of 1990 included a number of provisions intended to strengthen government oversight of the SOE sector, which allowed government to possibly reimburse SOEs for the cost of non-profitable public service obligations, and the annual submission of an annual budget and three-year operational plan. He however stated that the implementation of these provisions was not made mandatory by the Act.
“In order to address the shortcomings of the Public Enterprise (PE) Act, the Ministry of Finance and Economic Affairs, in collaboration with key stakeholders including the National Assembly, the Ministry of Justice, SOEs, the Office of the President, and the National Audit Office (NAO), took the lead along with an external consultant and drafted this SOE Bill, which was widely circulated for comments and validated by all stakeholders,” he told the assembly.
The drafting process he said entailed reviewing all the laws and regulations governing the establishment and operations of Public Enterprises in The Gambia, as well as incorporating elements of best international practice in the regulation and monitoring of SOEs.
“The new Bill aims to address the identified challenges on the Public Enterprise Act. Meanwhile, the reforms factored on the SOE Bill, mainly centres on the creation of an SOE Commission that will serve as an oversight and regulatory body for all SOEs in the country,” he said.
The SOE sector, Minister Jobe said, is also challenged due to the fact that it is currently governed by a multitude of laws and regulations, which thus creates numerous legal challenges and gaps in conducting effective oversight of the sector.
He underscored that the application section of this SOE Bill will cover prior public enterprises established by statute, those formed under the Companies Act, those formed by Incorporation order under the Public Enterprises Act, 1990 and any new SOE established after the enactment of the Bill.
Minister Jobe told lawmakers that the Bill will therefore repeal the existing Public Enterprises Act of 1990, and it will also cater for the introduction of various new provisions in line with international standards.
He highlighted that some of the key additions in this Bill include:
a) establishment of a State-Owned Enterprise (SOE) Commission to serve as an oversight and regulatory body for all SOEs;
b) selection of SOE Board of Directors to include the necessary technical, financial and management expertise directly relevant to the operations of the SOE concerned, and that the Boards should include directors independent of the public service;
c) clearly defined role for the respective line Ministries and SOE management board;
d) need for government to bailout SOEs through the national budget provided they incur losses that may be caused by obligations imposed on them to deliver public services at prices that do not generate revenues sufficient to cover the full costs of these services;
e) establishment of a transparent appointment process for the SOE Regulatory Commission in consultation with the Public Service Commission using an objective selection criterion.
f) rotation of term of office for Commission members. • Regular monitoring and evaluation of SOEs by the Commission through the signing of Performance Contracts, which will lead to periodic performance reviews that will detect underperformance early on and rectify it to promote a continuous cycle of improvement;
g) clear requirement of SOEs to follow international accounting standards, i.e. International Finance Reporting Standard (IFRS);
h) SOE Performances, both financial and operational, to be continuously monitored and made publicly available; and
i) participation of female board members to be strongly encouraged.
He lamented that the enactment of the bill will have financial implications on the government’s fiscal operations, adding that as a subvented entity, the government will be responsible for financing the operations of the SOE Commission.
He added the legislative implications of the bill include the repealing of the Public Enterprises Act of 1990, provide a saving clause to save the actions done under Public Enterprises Act of 1990, and the Minister also has the power to make regulations where necessary in order to ensure effective regulatory environment and continuous reform of the SOE sector.
“We will not be successful as a country in the absence of well-functioning State-Owned Enterprises, because they are catalysts for industrialisation. However, in order for them to function well, they require a capable state that positions them strategically to drive development, grow the economy to meet the needs of the people, and this is what we are striving for with this Bill,” he said.
In order to address some of the challenges currently faced by SOEs, he said they must institute a balance between the state’s ownership mandate (appointing boards and providing oversight) and improving SOE competitiveness simultaneously.
This he remarked should begin by introducing a clear legal and regulatory framework supported by a strong coordinating mechanism for oversight.
He averred that the enactment of this Bill will leave the country with a more dynamic set of SOEs that compete on a level playing field with the private sector, and feature modern corporate governance with professional boards and management.
“The setting up of the SOE Commission which is in line with international best practice, will therefore ensure a standardised governance, financial management and operational performance framework for all SOEs to ensure that they are responsive to the country’s needs and the implementation of our National Development objectives,” Minister Jobe told Lawmakers.