PUBLIC ENTERPRISE
OVERVIEW
What are Public Enterprises (PEs)?
State-owned enterprises, Public enterprises and Public Corporations are some terms used to define government owned entities across the world.
A determined definition of all government owned or government controlled entities are those whose assets are held in corporate form and which generate the bulk revenues from the sale of goods and services
(OECD, 2005 and GFS,2001)
Understand the role and purpose of SOEs in the economy; country
As these sectors are crucial contributors to the economic growth and development of Seychelles they as a result:
- Provide essential public goods and services to consumers
- Drivers of competitions in the local and international markets
- Assist the government in maintaining a fairly steady flow of income through investments and returns for instance through the payments of dividends and taxes
- Furnish employment opportunities
- Essentially contributes towards the social goals of the government for the country
How many Public Enterprises are there in the Seychelles?
The PEMC Act 2013 provides that the Act shall apply to every public enterprise and any subsidiary of such organisation.
The Seychelles public enterprises sector is composed of 31 entities including all their subsidiaries.
They are classified under five different sectors of the economy and are distinctively composed of numerous sizes in terms of assets, returns, liabilities, types of public services offered and number of human resources employed.
Legal Forms
Amongst the 32 Public Enterprises, 21 are incorporated under the Companies Ordinance 1972, “the Ordinance”, as commercially-oriented limited liability companies while the other entities have been established under their respective decrees and acts as corporations or authorities.
Role of PEMC in the Public Enterprise sector
PEMC is the shareholder representative for government, tasked with an oversight responsibility of all public enterprises.
In line with the mission of PEMC; “To have high performing and compliant Public Enterprises in the Seychelles”, the Commission operates alongside the following values:
- Providing the best professional and ethical advice to the Ministers, Boards and stakeholders.
- Being accountable and acting with integrity in all dealings with public enterprises and other stakeholders.
- Promoting Good Governance and upholding the law.
- Working together as a team through participation and involvement of staff and stakeholders in decision-making.
- Keeping abreast with the latest developments in the different sectors within which the PE’s operate.
Aggregate Statistics on the PE Sector,
Sub-Sectors and Share of Economic Activity
During 2019, some PEs failed to comply with the reporting obligations stipulated in Part V of the PEMC Act. PEs’ selective or non-compliance to the PEMC Act and other governing legislation, such as late or non-submission of Annual Financial Statements (AFS), has affected the availability and quality of the below data (ref. Public Enterprises Annual Report 2019).
Employment
The PE sector employed 6,413 persons for 2019, accounting for 12% of the national workforce. PUC and IDC were the largest employers with 1,182 and 800 employees, respectively. Appendix 6 presents the number of employees per PE for 2015-2019.
Net Profit/Loss
The PE sector reported a net profit after tax of mSCR865.5 for 2019; a 113% (mSCR459) improvement compared to 2018. The PEs’ 2019 aggregate net profit after tax corresponds to 4% of GDP, as opposed to 2% in 2018.
Energy Sector
In 2019, the Energy sector observed a 52% (mSCR117) rise in aggregate net profit compared to 2018. This was mainly a result of SEYPEC’s net profit rising by 168% (mSCR148.9) due to cost of sales falling by 6% (mSCR310.9).
Financial Sector
The Financial sector’s aggregate net profit reduced by 14% (mSCR56.5) from 2018 to 2019, due to a 35% (mSCR52) decline in the net surplus of SPF and an 81% (mSCR21.4) reduction in DBS’ profit. The decrease in SPF’s surplus was associated with fair value adjustments of its investments in associates. The reduction in DBS’ profit resulted from greater allowance for credit impairment caused by a rise in non-performing loans.
Services and Development Sector
The aggregate net profit of the Service and development sector declined by 17% from 2018 to 2019. This was predominantly due to IDC’s profit falling by 79% (mSCR33.2), caused by an 8% (mSCR25.3) reduction in revenue.
Total Assets
The PE sector’s aggregate assets represented 139% of nominal GDP in 2019 compared to 135% for 2018. In 2019, aggregate assets totaled bnSCR32.5, a 10% (bnSCR3) growth from 2018.
PEs in the Financial sector carried the highest value of assets (bnSCR14.7) at the end of 2019. Nouvobanq had the highest asset base (bnSCR7.4) within this sector, corresponding to cash and equivalents and loans to customers.
Total Liabilities
The PEs’ total liabilities was equivalent to 72% of GDP at December 31, 2019 as opposed to 65% for the previous period. The increase was caused by the rise in PUC’s borrowings as well as growth in customer deposits held by Nouvobanq and the lease liability of Air Seychelles on the Airbus A320 neo. At December 31, 2019, the PE sector’s aggregate liability was bnSCR16.8.
Transport Sector
The Transport sector was the least profitable sector for 2019 with an aggregate net profit of mSCR79.9. Nonetheless, the sector reported a 118% (mSCR513.2) improvement in its aggregate net profit compared to 2018, where an aggregate loss of mSCR433.3 was recorded. The growth was associated with a 90% (mSCR533.5) improvement in the net loss reported by Air Seychelles as a result of a 33% (mSCR510.4) reduction in direct operating costs.