Salone News

A case for repeal of the NCP

2 July 2019 at 06:56 | 1396 views

Commentary

A case for repeal of the NCP: Has the privatization commission outlived its usefulness in Sierra Leone?

By Kortor Kamara, USA

The purpose of this article is to analyze how and why the Privatization Commission has metamorphosed from its core function and mission of implementing divestiture and privatization of parastatals and public enterprises, as mandated in the NCP Act, 2002, into a super commission managing the day to day activities, corporate management affairs of diverse industries- most requiring professional competencies and capacity - certainly lacking at the Privatization Commission.

Having initially identified in the early 1990s 44 public enterprises, a program to effectuate governmental divestiture from these inefficient and public-resource burdened enterprises was enacted with the Public Enterprise Reform Act (PERDIC).

The PERDIC was subsequently deemed a colossal failure and was abandoned in 1996 - having only succeeded in divesting 14 out of 44 public enterprises.

The establishment of the National Commission for Privatization (NCP) in 2002, by the Tejan Kabbah administration and Parliament of Sierra Leone, together with World Bank support, heralded much hope that the problems that had beset the early privatization efforts could be overcome - with reforms, privatization and divestiture of 24 economically non-performance parastatals to be now expeditiously implemented.

The NCP Act, 2002 defined “divestiture to mean the divestiture of all government ownership in public enterprises”.

Moreover, Section 10 of the Act addresses the functions of the commission and delineated its primary responsibility for acting as a “prudent shareholder, respecting the distinction between shareholding and management”, in the event when parastatals have not been timely divested and sold.

Section 19 of the NCP Act clearly states inter alia that the purposes of the divestiture of parastatals are:
(a) to enable the public sector to focus on efficient delivery of basic services to the poor
(b) to allow wider private sector participation
(c) to remove the fiscal burden imposed by non performing public enterprises on the government budget.

The Act listed 24 public enterprises for divestiture and also provided guidelines for privatization of particular public enterprises, with “the divestiture of government interests in commercial operations in the financial and insurance sectors” to be carried out as soon as possible.

In September 2003, the NCP published its “Strategic Plan for the Divestiture of Public Enterprises- Implementation Programme (2003 - 2006)”.

This programme projected a one year timetable for divestiture and sale of most of the 24 listed public enterprises, inclusive from diagnostic studies, information memorandum, strategies and preparation of sale process and complete sales.

It is now 17 years since the NCP was statutorily mandated to prepare for divestiture and privatization of just 24 public enterprises in the country.

A review of the performance of the NCP in carrying out its core mandate, of facilitating divestiture and privatization of governmental interests in the original 24 public enterprises has been disappointingly virtually non existent.

This state of affairs at the NCP can be attributed largely to the change in its operational mission, during the erstwhile administration of president Ernest Bai Koroma from 2007 to 2018.

The Commission was allowed to usurp so much management authority and powers over the public enterprises that their core mission of effectuating divestiture of the public enterprises became secondary and largely abandoned. Rather than implementing the government’s privatization policy of transferring ownership interests to the private sector, the NCP has become a super public enterprise corporate entity managing the daily activities of various diverse companies and commercial institutions.

In some of these companies, such as the financial and insurance sector, business decisions pertaining to travel, salaries and business management improvements are being made by unprofessionals at the Privatization Commission. For example, why is the National Insurance Company (NIC) not managed or supervised by the SLICOM, rather than the Privatization Commission?

A disappointing omission in the commission’s annual reports of its activities, inclusive of its most recent report to president Bio, reveal the absence of any real data on public enterprises or parastatals divested or privatized.

It is now glaringly clear that the laudable legislative intent behind the establishment of the Privatization Commission has been perverted by the practice of the commission over the past several years, in failing to accomplish any meaningful divestiture.

The attention of the Bio administration to a review and repeal of the mandate of the Privatization Commission or its retooling and restructuring, to accomplish ownership transfers of these public enterprises to private entities, needs to be expeditiously embarked upon.

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