The Minister of Finance (MOF), Mr Ken Ofori Atta, has announced that the government has initiated the development of a State Ownership Policy (SOP) that will streamline the payment of dividends by State-Owned Enterprises (SOEs), Joint Venture Companies (JVCs) and public corporations.
Though, he did not give timelines, he said that in the interim guidelines on dividend payments already circulated to the SOEs stipulated that at the minimum SOEs should declare and pay 15 per cent of their gross profits as dividends to government.
“We expect that SOEs will fully comply with the guidelines in order to justify the investments government has made and continues to make in them,” he stated at the second annual SOE Policy and Governance Forum in Accra.
The two-day event was organised by the Ministry of Finance on the theme, “Promoting Good Governance in the SOE Sector through Accountability, Transparency and Integrity.”
SOEs and economic growth
Mr Ofori-Atta noted that an effectively managed, well governed and efficiently performing SOE played an important role as an extension of the capacity of the state and controlled about 50 per cent national assets.
However, most SOEs have refused to comply with the reporting and disclosure requirements of the Public Financial Management Act, 2016 (PFMA).
“My ministry developed and shared a template with SOEs to enable them to comply with the Act. This has been tardy so far. The ministry will enforce the relevant administrative sanctions in accordance with Section 98 of the PFMA,” he said.
He emphasised that JVCs with government equity were equally enjoined to comply with the Act.
The Country Director of the World Bank, Mr Henry Kerali, observed that despite the challenges that fraught Ghana’s SOEs, the sector contributed significantly to the Gross Domestic Product (GDP), with 39 SOEs in the energy, water, transport and financial sectors accounting for 25 per cent.
He noted that the lack of financial and fiscal discipline, low level of transparency and disclosure, and the wholesale changes with electoral cycle, regardless of performance were responsible for the challenges the SOEs faced.
“A few SOEs have professional boards and management to steer affairs of the organisation and there is often too much political interference in the day-to-day decision making of the SOEs,” he stated.
Mr Kerali recommended professionalising of SOE boards, exercising board fiduciary duties, enhancing transparency and disclosure, and institution measures to ensure financial sustainability, and charged government to encourage the development of competition in the broader market to enhance efficiency resulting in lower cost and improved quality service.
Overview of state ownership
The 2017 State Ownership Report launched at the forum showed that by end-2017, the government held equity interests in 86 entities operating in various sectors of the economy; 45 wholly owned SOEs and 41 JVCs.
The report touched on six major developments including Single Entity Reform (centralising oversight of the sector with the proposed establishment of the State Interests and Governance Authority (SIGA): Corporate governance improvements: and Government on-lending policy to address high rate of default in debt servicing.
The Senior Minister, Mr Yaw Osafo-Maafo, explained that the SIGA Bill which sought to absorb all the oversight functions currently exercised by the MOF, the State Enterprise Commission and other government institutions as far as SOEs were concerned, would be operational, latest by the second quarter of 2019.
“An effective SOE sector is one that embraces the virtues of accountability, transparency and integrity in the management of public assets. Government is optimistic of building a robust well-managed and a fit-for-purpose SOE sector that can deliver key services to aid economic growth,” he stated.
Highlights of the report
It showed a disturbing trend of low liquidity and overly leveraged SOEs that recorded a gross profit of GH¢4.89 billion, up by 59 per cent from 2016. The main contributors included the Ghana Ports and Harbours Authority, Ghana Airports Company Limited, Electricity Company of Ghana (ECG) and Ghana Water Company Limited.
Total revenue of GH¢27.34 billion was recorded with COCOBOD, ECG and the Volta River Authority recording highest upturns of GH¢10.25 billion, GH¢5.79 billion and GH¢2.63 billion.
The report revealed more positive outcomes for JVCs in the year under review with a gross profit of GH¢1.77 billion and net profit of GH¢800 million. — GB