Ghana’s state-owned enterprises (SOEs) recorded significant losses, totaling GHS 5.3 billion in 2021, with prominent institutions like COCOBOD and ECG at the forefront. To reverse this trend, a radical shift in leadership and operational strategies is needed, focusing on professional qualifications, efficiency improvements, and accountability. Key suggestions include adopting private sector business models, leveraging technology, and eliminating political interference. With proper reforms, SOEs can transform into profitable contributors to the national economy.
Ghana’s state-owned enterprises (SOEs) have historically drained national resources instead of contributing to economic growth. The 2022 State Ownership Report from the Ministry of Finance revealed that in 2021 alone, SOEs faced a cumulative loss of GHS 5.3 billion, particularly through institutions like the Ghana Cocoa Board (COCOBOD) and the Electricity Company of Ghana (ECG), who recorded significant deficits. COCOBOD’s struggles stem from mismanagement and excessive borrowing, while ECG suffers from inefficiencies, including illegal power connections and unpaid bills, resulting in annual revenue losses exceeding GHS 2 billion.
It is crucial for SOEs to be positioned as national assets rather than liabilities. If private companies succeed in the same markets where SOEs falter, the issue lies within the governance and management of these enterprises. A transformative approach is necessary to render Ghana’s SOEs profitable, focusing on improved leadership, mindset shifts, and operational strategies. Below are several key recommendations:
1. Professionalise Leadership, Not Politicise It: SOE leadership often hinges on political connections instead of qualified experience. A strategic shift toward merit-based selection, akin to Singapore’s Temasek Holdings, is essential, allowing experts with proven success to lead these enterprises.
2. Cut Bureaucratic Waste and Improve Efficiency: Many SOEs endure inefficiencies and bloated workforces; a report by the State Interests and Governance Authority (SIGA) in 2020 noted payroll costs represented over 60% of expenditures in some firms. Streamlining operations, investing in automation, and restructuring payrolls will enhance efficiency, as shown by Ethiopia’s Ethiopian Airlines.
3. Hold Leaders Accountable for Financial Performance: Requiring SOEs to publish audited financial statements will enhance transparency and accountability. Just as Rwanda mandates performance contracts for SOE executives linked to financial targets, Ghana should enforce similar accountability measures to ensure effective governance.
4. Adopt Private Sector Business Models: The government needs to approach SOEs as businesses rather than social service providers. Establishing clear revenue objectives and diversifying income will drive profitability; ECG, for example, must innovate debt recovery strategies while minimizing electricity losses.
5. Encourage Strategic Public-Private Partnerships (PPPs): By fostering partnerships with the private sector, Ghana can introduce capital and efficiency. Successful examples, like Nigeria’s Lekki Deep Sea Port project, demonstrate the viability of these collaborations in revitalizing struggling SOEs, particularly in energy and transportation.
6. Eliminate Political Interference in Operations: Political interference often leads to financial mismanagement. For effective profitability, SOEs must operate independently. Brazil’s Petrobras underwent reforms that minimized political intervention, a model Ghana could replicate for greater operational integrity.
7. Enhance Corporate Governance and Transparency: Proper governance structures are pivotal in mitigating corruption and inefficiencies. Boards must consist of seasoned professionals, and transparent procurement should be mandated to prevent mismanagement, as exemplified by Malaysia’s Khazanah Nasional.
8. Leverage Technology for Modernisation: Many SOEs still utilize archaic systems that hinder their potential. Investment in modern technology can vastly improve efficiency and revenue collection, as evidenced by Kenya’s M-Pesa platform which reformed revenue gathering for public services.
In conclusion, Ghana’s SOEs have the potential to transition from chronic loss-makers to vital contributors to national revenue, contingent upon implementing bold reforms. A concerted effort from the government, policymakers, and citizens is necessary to shift the operational paradigm, ensuring that these enterprises serve to generate wealth rather than squander it.
In summary, Ghana’s state-owned enterprises can be transformed into profitable entities through decisive reforms that focus on professional leadership, operational efficiency, accountability, and transparency. By adopting business-focused models and leveraging technology, as well as facilitating strategic public-private partnerships, Ghana can enhance the functionality of its SOEs. The imperative for reform is clear: it is both the government’s and the citizens’ responsibility to advocate for these changes to promote national economic growth and sustainability.
Original Source: www.ghanaweb.com
