Government has disclosed of an ambitious plan to list majority of State Owned Enterprises on the Ghana Stock Exchange (GSE) to promote efficiency and drive economic growth.
The move is among others expected to solve the financial challenges facing most SOEs in Ghana.
The listing of the companies should also increase public ownership in the various SOEs.
The Vice President, Dr. MahamuduBawumia who disclosed this further indicated that the increased private sector participation in some areas of the economy warranted that government limits its role in such sectors.
Dr. Bawumia was speaking at the opening ceremony for a two day policy and governance forum for SOEs in Accra.
“The growth of the private sector makes it is increasingly difficult to justify the participation of government in certain sectors of the economy given that most SOEs were initially created to fil gaps in the economy at a time that 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 sector participation and which continue to make losses,” he stated.
The Vice President added, “Government on its part will be exploring the possibility of listing as many SOEs as possible where feasible on the Ghana Stock Exchange as part of the overall drive to reform the sector and help them achieve economic success.”
SOEs whittle down drastically
The underperformance, liquidation and winding down of most of theState Owned Enterprises have led to a drastic reduction in their numbers over the last three decades.
From over 300 SOEs in the mid1980s, Ghana now has just 86 SOEs presently.
This also comprises 46 wholly government owned SOEs with 40 joint ventures.
A further breakdown also shows that 37 of the 46 wholly owned are commercial companies.
26 other SOEs are operating as Limited Liability.
There are 9 subvented agencies in addition to 40 other companies in which government has either majority or minority stakes including 10 mining companies in which government has up to 10 percent carried interest each.
Meanwhile, the Vice President believes the new agenda to strictly enforce the Public Financial Management Act (PFMA) will turn around the fortunes of the companies and grow the economy.
“An area which must also be of concern to us all is the impact of quasi fiscal activities of SOEs on the macro-economic environment. A case in point is the energy sector debts 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 financial commitments with financial and ultimately fiscal implication on the economy.”
“While the public financial management Act provides for how financial and commercial transactions made by state entities should be done and prescribe sanctions for non-compliance, 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 on the economy,” he remarked.
New code of operations for SOEs
On his part, Finance Minister, Ken Ofori Atta indicated the formulation of new guidelines to streamline activities in all SOEs to conform with the government’s agenda of promoting good corporate governance.
“Government in 2018 will codify the strategic direction and the underlying principles for how it intends to manage its ownership rights in the SOEs sector through the development and implementation of Ownership Policy. This policy will streamline the governance of the sector and serve as the bedrock of government’s corporate governance reforms in SOEs. The Ownership Policy for SOEs will detail the objectives of State ownership, the roles and responsibilities of the shareholder, Board and management and how government will exercise its role as shareholder.”
“As part of efforts to ensure the selection of highly qualified persons to serve on SOEs’ Boards and represent government on the Boards on joint ventures, SOE board nomination framework and guidelines will also be developed and implemented,” he explained.
18 SOEs make net loss of 791 million cedis
A 2016 annual aggregate report on SOEs showed that five SOEs made losses in the year under review.
They included; VRA, TOR, PMMC, VALCO and COCOBOD.
Although the rest made profits in 2016, seven companies recorded profits between 2014 and 2016.
These were; GPHA, BOST, GACL, GCGL, TDC, Ghana Re and NIB.
The total lossof the 5 SOEs was 1.79billioncediswhile the total profits for the remaining 13 was 1 billion cedis
By implication, the 18 SOEs recorded a net loss of 791 million cedis; translating into 44 million cedis net loss each.
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By: Pius AmihereEduku/citibusinessnews.com/Ghana