Ghana’s state-owned enterprises (SOEs) reported substantial losses, necessitating major reforms for profitability. Key strategies include professionalizing leadership, improving efficiency, adopting private sector models, establishing public-private partnerships, curbing political interference, enhancing governance, and leveraging technology. These changes aim to transform SOEs into essential contributors to the national economy.
Ghana’s state-owned enterprises (SOEs) currently represent a significant drain on national resources rather than an economic boon. The Ministry of Finance reported a cumulative loss of GHS 5.3 billion in 2021, with institutions like the Ghana Cocoa Board (COCOBOD) and Electricity Company of Ghana (ECG) leading in deficits. COCOBOD faces financial strain due to mismanagement and corruption, while ECG’s inefficiencies, including unpaid bills, lead to annual revenue losses exceeding GHS 2 billion.
SOEs should operate as valuable national assets, not liabilities. While private companies thrive in similar sectors, SOEs struggle due to operational issues rather than the business environment. A transformation in mindset, leadership, and strategies is essential for Ghana’s SOEs to become profitable. Proposed solutions include:
1. Professionalise Leadership: Leadership in SOEs should depend on expertise, not political affiliations. Competent business leaders, like those in Singapore’s Temasek Holdings, should be appointed to ensure success through merit-based selections.
2. Cut Bureaucratic Waste: Many SOEs carry bloated workforces which raise payroll costs. Restructuring and investing in technology can improve operational efficiency, as seen with Ethiopian Airlines’ lean operations.
3. Hold Leaders Accountable: Transparency is crucial; SOEs must publish financial statements and executives who fail to meet profitability should face consequences. Inspired by Rwanda’s contracts, Ghana should require performance metrics for SOE managers.
4. Adopt Private Sector Models: Treating SOEs like businesses necessitates setting revenue targets and optimizing operations for maximum return on investments. For ECG, innovative debt recovery strategies are vital; China National Petroleum Corporation has successfully diversified income streams.
5. Encourage PPPs: Strategic public-private partnerships can enhance SOE performance by bolstering capital and fostering innovation. Projects like Nigeria’s Lekki Deep Sea Port illustrate the benefits of effectively leveraging private partnerships in public enterprises.
6. Eliminate Political Interference: Political strategies often disrupt SOE operations. SOEs should be allowed to operate independently to enhance long-term profitability; Brazil’s Petrobras experienced recovery following similar reforms.
7. Enhance Governance and Transparency: To reduce inefficiency and corruption, boards should include qualified professionals while ensuring transparent financial processes. Malaysia’s Khazanah Nasional exemplifies strong governance that Ghana can adopt.
8. Leverage Technology: Many SOEs rely on outdated systems, focusing on tech investments can modernize operations. Kenya’s M-Pesa showcases how technology can improve revenue collection and reduce inefficiencies.
In conclusion, Ghana’s SOEs have the potential to stop being perpetual loss-makers and contribute positively to national revenue. Achieving this requires bold leadership reforms, a strategic shift to operational efficiency, and an emphasis on accountability. A collaborative effort from the government, policymakers, and citizens is essential to ensure SOEs become wealth generators for the nation.
Ghana’s state-owned enterprises can transition from being economic burdens to thriving contributors to national revenue through comprehensive reforms. By prioritizing professional leadership, enhancing operational efficiencies, and adopting private-sector business models, these enterprises have the potential for significant profit generation. Addressing political interference and embracing technology is also crucial to facilitate this transformation, making it imperative for all stakeholders to advocate for and implement these changes collaboratively.
Original Source: www.ghanaweb.com
