Legal expert urges stronger governance for SOEs

Legal expert, Ferdinand D. Adadzi, has emphasised the critical role of state-owned enterprises (SOEs) in Ghana’s national development, while underscoring a need for significant reforms to enhance their performance and accountability.

During a panel discussion at the 13th Ghana Economic Forum (GEF), Adadzi – a partner at AB & David and a law lecturer at GIMPA Law School – asserted that government involvement in business is essential, particularly for strategic sectors.

He cited Ghana Gas as a prime example, stating: “Without Ghana Gas, I’m sure we would have been in more trouble than we actually are”.

However, the legal expert pointed out that political interference often hinders efficient operation of SOEs.

“The challenge has always been that government doesn’t run business as business because of a lot of political interference,” Mr. Adadzi explained.

To address these issues, Mr. Adadzi proposed a series of reforms. He emphasised the need for clear targets, qualified leadership and robust accountability measures.

“Government must put in place leadership that understands these targets. Leadership that can be held accountable,” he stressed.

Mr. Adadzi also called for regular performance evaluations of SOEs, suggesting that these assessments should determine “where they are now” and “where they need to get to in the short-term, in the medium-term and in the long term”.

Interestingly, Mr. Adadzi argued against introducing more regulations or legal frameworks. Instead, he advocated for better enforcement of existing laws.

“The question becomes having the political will, leadership at the political level in order to enforce existing laws that we have,” he stated.

Mr. Adadzi highlighted the State Interests and Governance Authority’s (SIGA) role in overseeing SOEs. However, he noted that SIGA lacks the necessary authority to fully implement its mandated functions. For instance, while SOEs are required to submit annual reports to SIGA, many fail to do so without any consequences.

“SIGA must be given the authority to impose sanctions,” Mr. Adadzi insisted.

He pointed out that under SIGA’s law, the authority can recommend removal of chief executives who fail to provide reports – but this power is rarely exercised.

Addressing the president’s constitutional powers to appoint SOE leaders, Adadzi acknowledged this prerogative but emphasised the importance of maintaining proper governance structures.

He suggested that even presidential appointees should be primarily accountable to their boards rather than directly to the president.

“There should not be any instance when the chief executive that is appointed sees himself as being more accountable to the president than to his own board,” Mr. Adadzi cautioned.

As Ghana looks to engineer its economic model, particularly concerning SOEs, Adadzi outlined a strategic approach. He advocated for a thorough evaluation of each SOE’s current status and future viability. For those deemed necessary, he stressed the importance of clear performance targets and consequences for failing to meet them.

“We need to determine, is this something that we need? If we still want to maintain it, then we need to have a clear plan on how we perform going forward,” Mr. Adadzi concluded.