Senior Partner at AB & David, David Ofosu-Dorte says privatization of State Owned Enterprises (SOEs) is not the only way to ensure they consistently churn out profit and help in the growth of Ghana’s economy.
According to him, in spite of the high proceeds, the net direct revenue from privatization has been relatively modest, due to high debt, costs of divestiture and high outstanding liabilities of these firms.
In an interview with Citi Business News, David Ofosu-Dorte urged government to among other things, minimize its interference in the day-to-day decision-making activities of State-Owned Enterprises to address the annual losses they post and work towards becoming profitable institutions.
State-owned enterprises (SOEs) are significant players in many countries around the world, providing sizeable contributions to GDP, creating jobs, and supplying essential services to citizens.
As a result, the performance of SOEs has a direct impact on the social, political, and economic development of a country and on people’s everyday lives.
However, in Ghana like in many other countries, SOE sector has been characterized by chronic under-performance with poor returns on government investments and continuous reliance on government support, sometimes in the form of explicit government guarantees.
Some of these shortcomings can be attributed to major corporate governance failures, including weak managerial accountability, excessive politicization and unclear objectives in some of the country’s largest and most important SOEs.
In Ghana, latest data from the 2020 State Ownership Report reveals that State Owned Enterprises (SOEs) recorded an aggregate loss of ¢2.61 billion in 2020. This represents nearly 50% improvement over the 2019 aggregate loss of ¢5.16 billion.
According to the report, SOEs’ combined revenue increased by 19.30%, from ¢37.912 billion in 2019 to ¢45.23 billion in 2020.
Also, Joint Venture Companies (JVCs) portfolio moved from a loss position of ¢1.05 billion in 2019 to a profit of approximately ¢11.81 million in 2020.