Strengthening Management of State-Owned Enterprises in Bolivia
What was the objective of the South-South exchange? : The Bolivian Government sought to improve the management and regulation of state-owned enterprises (SOE), which provide services in key sectors such as energy, transport, and communication. Bolivian officials approved in 2013 a Public Corporation Law establishing a legal framework for state-owned enterprises. However, Bolivian officials lacked knowledge of how to design and implement models for strategic planning, corporate governance, and financial management of state-owned enterprises, which could inform the implementation of this Law and secondary legislation. Bolivian authorities sought to learn from the models of Brazil and Peru, which had faced similar SOE management challenges, to support the application of this Law.
In 2014, officials from key Bolivian ministries engaged in a multi-pronged exchange with Brazil’s Department of Coordination and Government of Public Enterprises (DEST), Peru’s National Financing Fund for State Enterprises (FONAFE), and other agencies and state-owned enterprises. In April 2014, Bolivian officials visited Peru and Brazil to learn about the respective roles of DEST and FONAFE; the national strategies and policies and approaches for planning, regulating, and financing state-owned enterprises; and, specifically, the SOE operations in energy, oil, water, and agriculture.
In May, Peruvian officials from FONAFE travelled to Bolivia to learn about Bolivia’s Public Corporation Law and share their experiences. Bolivian officials visited Peru again in June to investigate more deeply FONAFE’s organization, functions, and management tools for directing and regulating state-owned enterprises, particularly related to strategic planning, budgeting, and information systems. The exchange enabled Bolivian officials to gain new insights into options for governing, planning, and funding of state-owned enterprises. They also came to understand that effectively managing this sector requires a balance between control and autonomy, and providing support to individual enterprises to carry out their objectives. They also gained a better understanding of their role in the SOE sector and how to better coordinate their work.
The exchange was critical in helping the Bolivian Government to better manage state-owned enterprises, particularly by supporting application of the new SOE Law. In the end, Bolivian officials applied lessons from the exchange to draft and develop secondary legislation and rules and regulations related to the SOE Law. For example, what they learned during the exchange was applied to help develop a final version of the General Guidelines for SOE Strategic Planning and Management of External Financing and General Guidelines on SOE Assets and Services and Internal Financing.
Client Feedback from Minister Elba Viviana Caro Hinojosa, Ministry of Development Planning, Government of Bolivia
In December 2013, the Plurinational State of Bolivia enacted its first law on state-owned enterprises at the central state level (Law 466). After approval of this law, there was a need to pass regulations – also known as General Guidelines – on aspects of SOE management (for example, the financing system, administration of goods and services, public corporate planning, the employment regime). To inform the implementation of this law and the development of Guidelines, the Government engaged in an exchange with Peru (FONAFE) and Brazil (DEST).
What were the results from the exchange?
The knowledge shared with the Bolivian team by FONAFE and DEST was of the utmost importance to preparing general guidelines for SOE management with regard to public business planning and financing. The exchange also built the capacity of technicians in the Ministry of Development Planning to develop General Guidelines related to the legal regime of state-owned enterprises and to analyze regulations. Moreover, the exchange exposed best practices concerning adequate corporate governance in public companies.
The Ministry also intends to share input gained from the corporations dependent on FONAFE and DEST with Bolivian state-owned enterprises, and use them throughout the process of implementing Law 466. In addition, communication was improved between the Bolivian team, and established channels for continued learning between Bolivia, Peru, and Brazil on SOE management issues, particularly corporate governance, financial oversight, and strategic planning.
What would have happened if you didn’t have the exchange?
The exchange made possible useful, timely, and official information about the state-owned enterprises dependent on FONAFE and DEST and their practices related to strategic planning, financing regimes, and corporate governance. Furthermore, without the exchange, the Bolivian Government would not have established the closer contact among technical teams from Peru, Brazil, and Bolivia, and would have lost an opportunity for more in-depth knowledge of different SOE management and governance styles.