Ghana’s state-owned enterprises (SOEs) have faced persistent financial distress, with a recorded loss of GHS 5.3 billion in 2021. Key strategies proposed for their turnaround include professionalizing leadership, enhancing operational efficiency, instituting accountability measures, adopting business frameworks akin to the private sector, fostering public-private partnerships, eliminating political interference, strengthening corporate governance, and leveraging technology for modernization. Bold reforms are necessary for these entities to thrive as national assets rather than liabilities.
Ghana’s state-owned enterprises (SOEs) have historically posed significant challenges to national resources instead of enhancing economic development. The 2022 State Ownership Report from the Ministry of Finance indicated a staggering cumulative loss of GHS 5.3 billion by Ghana’s SOEs in 2021, particularly noting significant deficits from key institutions such as the Ghana Cocoa Board (COCOBOD) and the Electricity Company of Ghana (ECG). Mismanagement, excessive borrowing, and corruption have plagued COCOBOD, while ECG has faced financial strain partly due to illegal connections and unpaid bills, accruing annual revenue losses exceeding GHS 2 billion.
SOEs must transition from being perceived as burdens to national assets. If private companies prosper in areas where SOEs falter, the underlying issue is internal operational management, not external business conditions. Transforming Ghana’s SOEs into profitable entities necessitates a comprehensive change in mindset and operational methodologies, encompassing eight essential strategies.
First, it is imperative to professionalize leadership in SOEs rather than politicizing it. Current leadership appointments often stem from political allegiances rather than proven competency. For instance, Singapore’s Temasek Holdings showcases that success results from leaders with strong business backgrounds rather than political connections. Ghana could replicate this success by introducing merit-based criteria for SOE executive selections, emphasizing expertise and proven financial success.
Secondly, eliminating bureaucratic inefficiency and waste is crucial. A 2020 report from the State Interests and Governance Authority (SIGA) highlighted that payroll expenses comprised over 60% of total expenditures for some SOEs. Ghana Post exemplifies this issue, maintaining a workforce larger than necessary amidst declining demand due to digital communications. Restructuring payrolls, investing in automation, and streamlining processes are essential for enhancing operational efficiency, as demonstrated by Ethiopia’s Ethiopian Airlines.
Third, holding leaders accountable for financial performance is vital. All SOEs should be mandated to publish audited financial statements, with executives responsible for justifying their annual expenditures. A model to consider is Rwanda’s system of performance contracts for SOE managers, linking their tenure to specific financial and operational targets that, if unmet, result in their replacement. Such an approach should become legal for Ghanaian SOE executives.
Fourth, adopting private sector business models is critical. SOEs should not merely serve as social service providers; instead, they should function akin to profit-driven enterprises. For instance, ECG needs to identify innovative methods for debt recovery and minimize electricity losses instead of relying on rate increases. The China National Petroleum Corporation has demonstrated success in marrying service obligations with profitability through strategic pricing models and operational diversification.
Fifth, encouraging public-private partnerships (PPPs) is essential. By collaborating with private entities, SOEs can access much-needed capital, efficiency, and innovative practices. The Lekki Deep Sea Port project in Nigeria illustrates how PPPs can enhance infrastructure while mitigating governmental financial strain. Ghana should pursue similar collaborations, especially in sectors like energy and transportation.
Sixth, political interference must be curtailed within SOE management. Often, these enterprises are subject to political manipulation that leads to unwise financial decisions. Allowing SOEs to function independently will foster long-term strategic decisions over short-term populist actions. Brazil’s Petrobras saw success after reducing political meddling through structural reforms, a path Ghana must emulate.
Seventh, enhancing corporate governance and transparency is essential for combating corruption. SOE boards should consist of experienced professionals rather than politically appointed cronies, ensuring robust, transparent procurement and financial reporting processes. Malaysia’s Khazanah Nasional illustrates how robust corporate governance can maintain profitability by ensuring accountability and minimizing political influence.
Finally, leveraging technology is imperative for modernization. Many SOEs, like COCOBOD and ECG, still utilize outdated systems that impair efficiency. Investments into technological advancements can elevate operations and customer service, as evidenced in Kenya with the M-Pesa mobile money platform which revolutionized revenue collection for public services. Ghana should consider similar tech-driven updates, particularly for the ECG and the Ghana Water Company Limited.
In conclusion, Ghana’s SOEs possess the potential to become significant contributors to national revenue instead of enduring loss-makers. Reforming leadership, adopting strategic measures, and fortifying operational efficiency must be prioritized. It is time for Ghana to initiate substantial reforms that ensure SOEs generate wealth for the populace and contribute positively to the economy. The collective responsibility lies with the government, policymakers, and citizens to advocate for this transformative paradigm shift.
In summary, it is evident that Ghana’s state-owned enterprises can be revitalized from their current status as loss-makers to significant assets contributing to national wealth. Implementing strategic reforms such as professional leadership selection, accountability measures, corporate governance enhancements, and the adoption of private sector-like business practices is imperative. The envisioned transformation requires commitment from the government and society to ensure that SOEs serve the public good effectively and efficiently.
Original Source: www.ghanaweb.com
