Ghana’s state-owned enterprises (SOEs) have historically operated at a loss, with a cumulative deficit of GHS 5.3 billion reported in 2021. The article outlines a roadmap for reforming these SOEs, which includes professionalizing leadership, cutting bureaucratic waste, establishing performance accountability, adopting business models typical of the private sector, encouraging public-private partnerships, and enhancing corporate governance through technology and transparency. By implementing these strategies, Ghana can transform its SOEs into profitable entities that effectively serve national interests.
Ghana’s state-owned enterprises (SOEs) have historically served as a burden on national resources instead of fostering economic development. The 2022 State Ownership Report from the Ministry of Finance indicated that Ghana’s SOEs incurred a substantial cumulative loss of GHS 5.3 billion in 2021. This includes significant deficits from major organizations such as the Ghana Cocoa Board (COCOBOD) and the Electricity Company of Ghana (ECG).
Despite Ghana being the second-largest cocoa producer globally, COCOBOD has faced continual losses attributed to mismanagement and corruption. The ECG has similarly struggled with inefficiencies and illegal operations, incurring annual revenue losses exceeding GHS 2 billion. The potential of SOEs should be utilized as national assets instead of liabilities, necessitating a transformative approach to their management to achieve profitability.
1. Professionalize Leadership, Not Politicize It: Leadership at SOEs should be determined by competence and business acumen rather than political affiliations. Effective management requires experienced industry leaders who can navigate the complexities of the market. Singapore’s successful investment firm, Temasek Holdings, exemplifies the benefits of this model by employing finance professionals over political appointees. Ghana should adopt merit-based criteria for appointing SOE executives to ensure accountability and results.
2. Cut Bureaucratic Waste and Improve Efficiency: Many SOEs suffer from oversized workforces and inefficient operations. Reports indicate that payroll expenses alone account for more than 60% of some SOEs’ expenditures. For instance, Ghana Post operates with excess staff despite the growth of digital communication methods. A restructuring initiative focused on payroll optimization and operational streamlining could enhance profitability. The Ethiopian Airlines model demonstrates how lean operations can elevate international competitiveness.
3. Hold Leaders Accountable for Financial Performance: Transparency and accountability in SOE financial performance are crucial. Each SOE should publicly disclose audited financial statements and defend their expenditure decisions. In Rwanda, for instance, performance contracts for SOE managers tie their positions to achieving specific financial targets, promoting accountability. Ghana should implement similar contractual obligations for SOE leadership.
4. Adopt Private Sector Business Models: SOEs should function as businesses, setting clear revenue goals and diversifying income streams. ECG needs to innovate its debt recovery and loss minimization strategies, instead of relying solely on tariff increases. The China National Petroleum Corporation serves as a case in point, successfully balancing state obligations with commercial profitability through strategic pricing and investment diversification.
5. Encourage Strategic Public-Private Partnerships (PPPs): Strategic collaborations between the government and private entities can provide crucial capital and efficiency. Successful economies utilize PPPs to revitalize underperforming state assets. Nigeria’s Lekki Deep Sea Port project exemplifies a partnership that has modernized critical infrastructure while easing fiscal pressure on the government. Ghana should focus on similar arrangements in sectors like energy and transportation.
6. Eliminate Political Interference in Operations: Political manipulation often leads SOEs to pursue detrimental financial practices. It is vital to permit these organizations to operate independently, prioritizing long-term sustainability over short-term political gain. Brazil’s Petrobras became successful after reforms minimized political interference, enabling professionals to make informed operational decisions. Ghana must enforce similar reforms.
7. Enhance Corporate Governance and Transparency: Effective governance is critical in preventing inefficiency and corruption within SOEs. It is imperative that governance boards comprise seasoned professionals rather than political affiliates. Implementing robust procurement practices and stringent financial reporting can help restore integrity. Malaysia’s Khazanah Nasional exemplifies a model that ensures SOE profitability through strong corporate governance.
8. Leverage Technology for Modernization: Many Ghanaian SOEs still rely on outdated systems that compromise operational efficiency. Investment in technology can streamline processes, enhance customer service, and boost revenue collections. Taking inspiration from Kenya’s M-Pesa mobile payment platform could be crucial to modernizing revenue collection within companies like ECG and the Ghana Water Company Limited.
Conclusion: Ghana’s SOEs have the potential to transform into significant revenue contributors rather than constant loss-makers. With strategic changes in leadership, operational methods, and accountability measures, Ghana can cultivate profitable enterprises that serve the greater good. To achieve these ambitions, a collective effort by the government, policymakers, and citizens is essential to instigate necessary reforms.
To summarize, Ghana’s state-owned enterprises possess the potential for transformation into productive assets that contribute to the nation’s economy. By adopting strategic leadership reforms, improving operational efficiency, promoting accountability, and leveraging partnerships, SOEs can successfully shift from a cycle of losses to a trajectory of profitability. The implementation of these comprehensive strategies will require a concerted effort among all stakeholders to foster resilience and economic prosperity for the country.
Original Source: www.ghanaweb.com
