Ethiopian Railway Corporation (ERC) gets a new board chairman Seleshi Bekele (PhD), minster of Water, Irrigation and Electricity replacing the former board chairman Arkebe Oqobay (PhD), special advisor to the Prime Minister.
This is according to the new board member re-configuration made by the Ministry of Public Enterprises (MoPE). The Ministry re-configured the board of directors of the public enterprises it administers and oversees, in a bid to solve issues caused by the over lapping responsibilities of government officials.
The Ministry, which changed its name in 2015 from the Privatization & Public Enterprise Supervising Agency (PPESA), to Ministry of Public Enterprises administers 22 public enterprises, including the Ethiopian Railway Corporation, the Sugar Corporation, Ghion Hotel, Kombolcha Textile S.C and the Ethiopian Shipping & Logistics Services Enterprise.
There are 163 new board members, organised over the boards of the 22 enterprises. The new board members are ministers, high-level government officials and individuals with director portfolios at different government institutions and public enterprises and lecturers higher education institutions.
“Half of the new board members are new faces,” said Girma Amente (PhD), minister of Public Enterprises.
The main reason for the configuration of the boards was the lack of follow up and direction in the affairs of the enterprises. This was caused mainly by scheduling conflicts’ between members’ formal duties, and board meetings. In addition, there was also the problem of some officials serving on multiple boards at once, according to Mohammed Abdurahman, adviser to the Minister of Public Enterprises. The new configuration means that one official can only serve on one board.
The composition of the advisory boards varies from one public enterprise to the other. The highest number of board members is 10. The National Alcohol and Liquor Factory has the smallest number of board members with five.
“We structured the boards based on the magnitude of the companies and their complexity of duties,” Mohammed told Fortune.
The 22 boards are directly answerable to the MoPE. They will have a chairman, and three sub-committees, namely strategic and business development, audit and finance committees.
A board member will have a three-year working period, and the boards must hold regular monthly meetings, according to the new structure, Missing three meetings will result in the members being removed from their position.
During the first six months of the current fiscal year, three out of the 22 enterprises, reported losses, including Bahirdar Textile S.C and Caustic Soda S.C.
This is in contrast to the experience of China, where the top 12 companies are all state owned. Also, out of the top 98 Chinese companies, only 22 are private. Many of the Chinese companies working in Ethiopia are state owned.
“From regular visits, I saw that many enterprises are disorganized and their property management is very irritating,” said Birtukan Sebsibe, a member of the public enterprises standing committee in Parliament.
The main responsibilities of the new board members will be working on capacity building, competency of the enterprise, project and investment administration, follow-ups and evaluation, according to Girma.
“The boards were composed based on the members’ field of expertise, and educational background. The minimum qualification was B.A degree,” Wondafrash Assefa, communications director of the Ministry told Fortune. ”
Previously, there was a system to incentivize board members when the enterprises earned profits, but not a system that held them accountable when the companies registered losses, according to Mohammed.
The ministry also introduced a new system with which the boards will have to comply: Key Performance Indexes (KPI) and accountability for the poor performances of their enterprises.
In addition to direct monitoring of the 22 public enterprises, the Ministry also monitors the corporate governance and corporate finance of other public enterprises including Ethiopian Airlines, Ethiopian Airports Enterprise, Ethiopian Electric Power and ethio telecom.
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