Ghana’s state-owned enterprises have suffered significant financial losses, totaling GHS 5.3 billion in 2021. Key contributors to these losses include mismanagement, inefficiencies, and political interference. To transform SOEs into profitable entities, the article outlines eight strategic recommendations, including professionalizing leadership, improving efficiency, and encouraging public-private partnerships.
Ghana’s state-owned enterprises (SOEs) have consistently underperformed, draining national resources instead of promoting economic growth. Recent findings from the 2022 State Ownership Report by the Ministry of Finance indicated that in 2021, SOEs incurred a staggering cumulative loss of GHS 5.3 billion, with organizations such as the Ghana Cocoa Board (COCOBOD) and Electricity Company of Ghana (ECG) experiencing significant deficits.
Despite Ghana being a leading cocoa producer globally, COCOBOD has faced losses attributable to mismanagement, excessive borrowing, and corruption. Similarly, ECG suffers from inefficiencies such as illegal power connections and unpaid bills, which result in annual revenue losses exceeding GHS 2 billion. Hence, SOEs must transition from being perceived as liabilities to being regarded as national assets.
The critical issue lies not in the operating environment but in the governance of these institutions. A transformative approach to leadership, operational strategies, and a reimagined mindset is essential for enhancing the profitability of Ghana’s SOEs. Here are key strategies to consider:
1. Professionalise Leadership, Not Politicise It: The selection process for SOE leadership should prioritize expertise over political affiliations. Drawing inspiration from Singapore’s success with Temasek Holdings reveals that experienced professionals lead to better organizational performance.
2. Cut Bureaucratic Waste and Improve Efficiency: Many SOEs are hindered by inflated workforces and inefficient practices. For instance, Ghana Post operates with a workforce that exceeds what is operationally necessary. Restructuring payrolls and streamlining operations is crucial for enhancing efficiency.
3. Hold Leaders Accountable for Financial Performance: To bolster accountability, every SOE should be mandated to publish audited financial statements. Executives should face repercussions for failing to achieve profitability, similar to Rwanda’s establishment of performance contracts for SOE managers.
4. Adopt Private Sector Business Models: SOEs should be treated as businesses, with clear revenue targets and diverse income streams. For example, ECG needs innovative debt recovery methods and loss minimization strategies to avoid reliance on tariff hikes.
5. Encourage Strategic Public-Private Partnerships (PPPs): Collaborating with private entities can enhance SOE efficiency and innovation. The Lekki Deep Sea Port project in Nigeria exemplifies a successful PPP model that modernized infrastructure while alleviating government financial burdens.
6. Eliminate Political Interference in Operations: To achieve sustainable profitability, SOEs need to operate independently from political influence. Similar to Brazil’s Petrobras, reducing political meddling can facilitate sound financial management.
7. Enhance Corporate Governance and Transparency: Establishing solid governance structures can curtail corruption and inefficiency. Boards comprising experienced professionals should oversee transparent procurement and financial reporting processes, drawing lessons from Malaysia’s Khazanah Nasional.
8. Leverage Technology for Modernisation: Outdated systems in SOEs hinder efficiency. Investing in technology can improve operations, customer service, and revenue collection, as demonstrated by Kenya’s M-Pesa initiative in transforming public service revenue collection.
In conclusion, Ghana’s SOEs can cease being synonymous with financial losses. By embracing strategic leadership, operational efficiencies, and innovative partnerships, these enterprises can shift towards becoming significant contributors to national revenue. Urgent reform is necessary to align SOEs with public interests, ensuring they generate wealth rather than waste. The collective effort of government, policymakers, and citizens is essential in catalyzing this transformational paradigm shift.
This article outlines a comprehensive roadmap aimed at transforming Ghana’s state-owned enterprises from financial liabilities into productive assets. By focusing on professional leadership, enhancing efficiency, and fostering public-private partnerships, these enterprises can significantly contribute to national revenue. The call for urgent reforms underscores the necessity for a paradigm shift to ensure that SOEs operate effectively and serve the interests of the general populace.
Original Source: www.ghanaweb.com
