Transparency in financial reporting key to unlocking capital for SOEs

Transparency and discipline in reporting standards by State Owned Enterprises (SOEs) has been prescribed as key to unlocking private sector capital and funding for these entities as they seek to grow the economy.

Nana Dwemoh Benneh, CEO of the Universal Merchant Bank (UMB), made the call during an expert panel discussion at the just-ended State Interests and Governance Authority annual conference in Kwahu-Nkwatia in the Eastern Region.

The conference has become the annual steering conclave for enterprises in which government has significant stake and regulatory authorities. This year’s edition had over 200 participants and had President Nana Addo Danquah Akufo-Addo and other senior government officials in attendance.

Nana Dwemoh spoke on a panel which included Mr. Daniel Addo, CEO of Consolidated Bank Ghana; Hajia Abibata Shanni Mahama Zakariah, CEO of MASLOC; Madam Abena Amoah, CEO of the Ghana Stock Exchange; and Mr. Kwame Okyehene-Mensuo, Ministry of Finance. The session was moderated by Mr. Kabral Blay Amihere.

The panelists were emphatic that though there was an economic crisis, they were bullish about the opportunities for growth in the economy. They were convinced that SOEs could access the needed capital and funding locally as the international lines were constricted.

Madam Amoah noted that the Ghana Stock Exchange remained a viable avenue for SOEs as there were considerable pools of capital locally looking for investment opportunities. She, however, noted that this capital can only be unlocked if SOE’s adapted the rigour and best practice of private enterprise in financial reporting and governance.

This view was supported by Mr. Daniel Addo, who noted that transparency was critical, especially in ascertaining cash flows. He noted that his bank had been able to extend a significant credit to SME’s in enclaves like Makola, because they are able to get attached to these enterprises and have a view of their transactions.

Nana Dwemoh Benneh followed through on Mr. Addo’s point, noting that it was now possible to achieve this visibility via digital payment platforms. He noted that UMB, for instance, had developed a 5th-generation platform marketed as SPEEDPAY, which could be integrated into SOE payment systems. He noted that adoption of such a system will not only improve revenue collection and address revenue leakages, but will also assure banks and other finance houses of the viability of the enterprise, on which basis capital structuring could be achieved.

Both Hajia Zakariah and Mr. Okyehene-Mensuo noted that involving the Ministry of Finance early in financial engineering leads to better and positive outcomes. Hajia Zakariah used the example of MASLOC, which was able to package a successful proposal to unlock a funding line from the African Development Bank through technical support from the Ministry of Finance.

The CEO of the State Interests and Governance Authority, Mr. Edward Boateng, noted that the insights gleaned were useful, with the key action point being a push for all SOEs to adapt digital payment platforms so they could leverage their cash flows. The conference closed on the 11th of February, 2023.

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