SoEs To List On GSE

Nana Akomeah (2nd left) CEO STC presenting a cheque to Ken Ofori Atta, Finance Minister. With them are Vice President Dr Mahamudu Bawumia and Asamoah Boateng at SOE and policy forum in Accra

Government is considering listing many State Owned Enterprises (SOEs) on the Ghana Stock Exchange (GSE) to enable individuals and corporate entities own shares in them.

Vice President Mahamadu Bawumia, who made the announcement at ‘2017 SoEs Policy and Governance Forum’ in Accra put together by the Ministry of Finance yesterday said, “it is part of the overall drive to reform the sector and help them achieve commercial success.”

He said “a recent report by the Ministry of Finance covering 18 SoEs indicated that they made a net loss of GH¢791 million, in addition to receiving loans and financial support totaling more than GH¢13 million, this is no longer sustainable.”

“Given that most SoEs were initially created to fill gaps in the economy at a time when there were no private sector players with sufficient leverage to pursue such investments, it is increasingly making less sense for government to keep its interest in SoEs in sectors with strong private participation and which continue to make such losses,” he emphasized.

Fiscal impact

The Vice President raised concerns about the impact of the quasi-fiscal activities of SoEs on the macro-economic environment.

“A case in point is the energy-sector debt that has also created systemic risks in the banking sector. As managers of SOEs, the challenges we continue to have over these debts must be at the back of your minds when executing contracts and making commitments with financial and ultimately fiscal implications for the whole economy,” he noted.

While the Public Financial Management Act shows how financial and commercial transactions by state entities should be done, and prescribes sanctions for non-compliance, Dr Bawumia insisted that “at the end of the day, it is the decisions you make on a day-to-day basis that will have positive and or negative impact economy-wide, and it is my expectation that this forum will address the PFMA as part of its deliberations.”

Corporate governance

He identified major weakness in some SoEs in the area of corporate governance structures, stressing the need to harmonise the way in which government manages these.

That, he said, was because “currently, multiple institutions, including the Ministry of Finance, the State Enterprises Commission (SEC) and sector Ministries perform various oversight functions in the SOE sector.”

“This fragmentation in the government’s ownership structure, coupled with the absence of a clearly defined ownership framework, has limited government’s ability to effectively oversee SoEs,” he noted.

As part of the broad reforms, he indicated that “the State Enterprises Commission, as well as selected SoEs, are benefitting from a World Bank Technical Assistant Programme focused on consolidating the state’s ownership role in SOEs into a Single Entity, improving performance and ensuring effective and efficient service delivery by SoEs”

These reforms, he said, “also includes the development of key policies for the sectors within which the SOEs operate, including ownership policy, board nomination policy, financing policy, amendment of Acts establishing relevant SOEs to incorporate corporate governance sections and the listing of some SOEs on the Ghana Stock Exchange and conversion of others into Limited Liability Companies.”

These actions are expected to significantly improve the governance of SOEs.

By Charles Takyi-Boadu, Presidential Correspondent