State-owned companies record GH¢3.1bn in losses

Government faces an uphill task of turning around the fortunes of state-owned enterprises (SOEs), as the entities recorded more than GH¢3bn in losses in 2018, a report by the Ministry of Finance has shown.

The report, which captured the financial performance of 36 state-owned companies, revealed that the latest financial performance shows a 150.5 percent deterioration over the previous year when SOEs recorded a net loss of GH¢1.2bn.

In a foreword to the 2018 State Ownership Report, published on June 3, Finance Minister Ken Ofori-Atta described the SOEs’ financial performance as being “persistently abysmal” and a source of worry.

“The financial performance of SOEs is a major concern to us, both from the standpoint of the state as an investor, which expects commensurate returns for its investments and as the bearer of the fiscal risks from SOEs,” he noted.

For companies that the state jointly owns with other private interests, there was a marked improvement in their financial performance over the previous year.

Out of the registered 42 joint-venture companies (JVCs), 25 submitted their financial statements, posting an aggregate net profit of GH¢1.4bn in 2018.

This represents a 598.4 percent improvement from the combined net loss of GH¢272.2m posted in 2017.

SOEs and JVCs posted marginal increases of 7.4 percent and 2.5 percent respectively in revenue, with the report stating that the ability of the JVCs to keep their costs down compared with the SOEs accounted for their contrasting bottom-line results.

SOEs recorded operational costs of GH¢17.9bn in 2018, an increase of 18.1 percent over the 2017 figure of GH¢15bn. The JVCs, however, increased their costs slightly from GH¢32.1bn in 2017 to GH¢32.3bn in 2018.

Policy reforms

The Finance Minister in his foreword said government is working with the State Interests and Governance Authority (SIGA), which replaced the State Enterprises Commission, to undertake a raft of reforms to make SOEs profitable.

“These policy reforms focus on addressing the key constraints hampering the operational and financial performance of SOEs. Key among these constraints are the poor corporate governance culture and practices of SOEs,” he said.

Mr. Ofori-Atta said the government will soon implement a corporate governance improvement programme across the 48 SOEs.

“It is expected that the action plans, which would be tailored to the specific circumstances and challenges of the respective entities, would enhance the processes, systems, practices and procedures by which the entities are governed and managed and thereby boost their prospects for improved financial performance,” he added.

The Director-General of SIGA, Stephen Asamoah Boateng, noted that utilising and adapting to modern technology to create smart workplace environments will enhance the efficiency of operations in SOEs.

He said there will be real-time performance monitoring and reporting to provide openness, transparency and accountability to assist in decision-making and shareholder value as well as serve stakeholder interests.