The ministry of finance, in collaboration with the State Enterprises Commission, launched the 2017 annual report of State Ownership on 26th – 27th September, 2018 at Movempick Ambassador Hotel in Accra. The programme, under the “Theme Promoting Good Governance in the SOE Sector through Accountability, Transparency and Integrity”, chaired by the Senior Minister Dr Yaw Osafo-Marfo, was attended by the Finance Minister, Heads of State-owned Enterprises and Joint Venture Companies.
This platform affords the government, represented by the Finance Ministry, to provide a picture of how these State-owned Enterprises have fared in the previous year, the gains made, challenges encountered and the way forward.
In his opening remarks, the Executive Chairman of State Enterprises Commission, Hon Stephen Asamoah-Boateng welcomed the guests and expressed his profound gratitude for their presence. He then delved into his tenure as head of State Enterprises Commission and reiterated his mission and vision which is being vigorously executed with the able assistance of Directors and staff of the commission.
The Executive Chairman opined that “new opportunities are being explored within our legal framework and working with all stakeholders to design an appropriate mechanism of ensuring Government’s interest in the mining companies is enhanced to appropriately benefit our people.
He also hinted of a “proposal for a unified, centralized and digitized Performance Monitoring and Evaluation Framework for the effective, real time monitoring of SOE operations as has been set out in the contracts will be pursued and shall also increase physical monitoring visits to enhance our appreciation of the SOEs’ operations and improve on our monitoring and evaluation reporting.”.
“Working within our mandate, the Commission will be instituting a bi-annual reporting on 31st July and 31st January of each year to let the Ghanaian public know and appreciate each SOE’s performance and contribution to the economy. One of the critical ingredients in the management of an organization is good corporate governance” Hon Asamoah-Boateng stated.
For instance, a 2016 report by the World Bank revealed how non-adherence to ethics of corporate governance practices; actually affect overall performance of State-Owned Enterprises. And to curb this challenge, Hon Asamoah-Boateng outlined measures being spearheaded by his outfit including “organizing corporate governance training for twenty-three (23) boards and management of SOEs in efforts to deepen and sharpen their skills on corporate governance, enhance effective accountability and transparency, which is expected to lead to prudent management of the SOEs”.
“More of such important capacity building can be expected going forward. My humble appeal is for all of us to work as team players towards the success of the government’s agenda in the sector”, he stated.
Chamber of CEOs of SOEs
Since time in memorial, state-owned enterprises have often operated independently, even in the area of inter-trading, where GIHOC, for example, can sell products to other state-owned entities during special occasions like Christmas.
It is in the light of this,therefore,that, “for some time now, the Commission has been working with the Chief Executive Officers (CEOs) of SOEs and facilitating the formation of a Chamber of CEOs of SOEs to promote inter-trading activities that will enhance growth and create more jobs; encourage each other to attain best international practices through peer review mechanism; and promote knowledge sharing so as to maximize operational and financial opportunities to challenge, assist and guide the SOEs to become top-notch companies.
This notwithstanding, Hon Asamoah-Boateng recounted some difficulties in the sector and measures being taken to address them. He mentioned “debt overhang and liquidity challenges that the Commission has been working with the Ministry of Finance (MoF) to address these issues, and that, “discussions have been initiated with the MoF to consider seven (7) SOEs for some stimulus package, and how the Commission is also seriously assisting some SOEs in retrieving their monies locked up with various state institutions, including some Ministries, Departments and Agencies (MDAs), and our efforts are yielding results.
Coupled with these steps being taken by of SEC, is also the “government’s efforts in resolving the legacy debt within the energy sector. After this exercise, the Government cannot continually be expected to provide that financial support to keep SOEs running” Hon Asamoah-Boateng stated.
In conclusion, Hon Asamoah-Boateng said “the strategic importance of this sector to the economic transformation agenda of the government is in no doubt: that is why the Government intends to bring the sector to the fore of its economic growth, industrialization and job creation agenda and has taken steps to holistically deal with structural and fiscal challenges of the SOEs”.
But he cautioned that “the Government’s support and efforts alone will not bring the desired outturn unless each and every one of us in the ship paddles in the direction of the dream of the President, Nana Addo Dankwa Akufo-Addo to its successful destination”.
The minister of finance, Hon Ken Ofori-Atta, on his part, reminded the participants of government’s policy guideline as captured in the 2018 budget statement by indicating that “the budget outlined pragmatic policies and prioritized key programmes and flagship projects to promote economic growth, restore macroeconomic stability, increase revenue generation, promote private sector participation and wealth creation, boost agricultural productivity and production, promote quality education, develop leadership skills, and to institutionalize vocational and creative skills in order to promote and establish an entrepreneurial culture”.
He then highlighted on the state of the economy as bequeathed to the NPP government on 7th January,2017 by the exiting NDC administration with the indication that “The economic challenges included a weakened financial services sector; our debt to GDP overhang of 73.1 percent and our over exposure to the global economy; however, Government’s disciplined and prudent management of the economy based on the implementation of sound macroeconomic policies and fiscal consolidation has yielded positive results”.
The finance minister further opined that “all the macroeconomic indicators are pointing in the right direction: overall real GDP growth (including oil) of 8.5 percent; headline inflation of 9.9 per cent as at July 2017 compared to 15.4 percent in December 2016; declining interest rates (from 25 percent in 2016 to 19.3 percent in 2017); improved balance of payment surplus of US$1,091 million (201 percent higher than the 2016 surplus of US$362.1 million), increased international reserves of US$7,554.8 million which amounts to 4.3 months of import cover; and declining fiscal deficit from 9.3 per cent of GDP in 2016 to 5.9 per cent in 2017 (outperforming the target of 6.3 per cent). These are some of the remarkable achievements in 2017”.
Hon Ken Ofori-Atta further assured that “the strategic role of SOEs has been duly recognized and is reflected in government’s national development agenda. Any successful leveraging of SOEs to potentially support our development requires a robust institutional framework to enable SOEs diligently execute their mandates. In this regard, government has initiated various policy reforms and interventions to achieve the key objectives of fostering coherence in the supervision and oversight of SOEs as well as addressing key constraints hampering the performance of these enterprises”.
In pursuance of these policy objectives, Hon Ofori-Atta was “pleased to announce that significant progress has been recorded in our reform agenda for the SOE sector in 2017, and that, “the Economic Management Team (EMT) approved the establishment of a Single Entity to manage the interests of the State in SOEs; joint venture companies (JVCs) and other state entities including regulatory bodies”.
“The Single Entity, which is proposed to be known as the State Interests and Governance Authority (SIGA), is expected to streamline and centralize government’s currently fragmented framework for managing the interest of the State in the specified entities, particularly SOEs. It would ultimately help to improve the governance and performance of the entities. In 2017, Cabinet approved the Corporate Governance Action Plans for implementation by government and five (5) SOEs”.
The Hon Minister further opined that “the Action Plans are intended to address gaps in the corporate governance regimes of the selected SOEs, namely Volta River Authority (VRA), Electricity Company of Ghana (ECG), Ghana Water Company Limited (GWCL), Ghana National Petroleum Corporation (GNPC) and TDC Development Company Limited”.
Assuring stakeholders of government’s commitment to carry through its reform agenda to carry through its reform agenda to put SOEs on a sustainable path to financial and commercial viability, the minister said “as efforts to address the issues of inconsistencies in as well as rationalize and standardize emoluments of Chief Executives Officers (CEOs) of public sector institutions, their Boards and Councils, Government set up a committee to develop a broad policy on the remuneration of CEOs and Boards of public sector institutions and make recommendations for government’s consideration”.
“Government’s aim is to instill the underlying principles of equity, fairness, transparency and productivity in remuneration as well as eliminate ‘excessive’ executive remuneration. Government has also commenced the development and implementation of a State Ownership Policy, which will, among others, outline the rationale for the State’s strategic ownership of interest in SOEs and JVCs and also clarify the relationship between the State as the owner and SOEs/JVCs” Hon Ofori-Atta stated” Hon Ofori-Atta stated.
History of SOEs
The Senior Minister, Hon Dr Yaw Osafo-Marfo, who stood in for His Excellency Nana Addo Dankwa-Akufo-Addo, the president of the republic of Ghana, took participants through the history of State-Owned Enterprises and Joint Venture Companies during the first republic. He narrated how numerous SOEs, including laundries and manufacturing plants were set up, but somewhere along the line, some of these SOEs were liquidated due to unproductivity.
He was however happy with the array of talents assembled the forum and expressed the “faith that Ghana does not lack the brains to develop”. He also touched on dividends being paid to government by these SOEs and openly expressed dissatisfaction by saying “the volume is not commensurate with investments”.
On the issue of compliance with laid-down reporting systems by SOEs, Hon Osafo-Marfo said it has been “unsatisfactory” because “only 48 out of 86 have responded to requests from the ministry of finance for audited financial reports” which he described as going against the tenets of the Public Financial Management Act [PFMA 2016 SEC 4, 5 and 6] which prescribe sanction regime”.
Accountability, Transparency and Integrity
He opined that “the MoF has the backing of cabinet to sanction non-compliant CEOs of SOEs” and further reiterated that “under the administration of Nana Addo, there will be continued adherence to accountability, transparency and integrity in the management of SOEs”.
He also assured the participants that “actualization of State Interest and Governance Authority[SIGA] as the umbrella body for ensuring proper running of SOEs through good corporate governance practices, is very much on course”, and that, “the document is currently before cabinet sub-committee on the economy”.
Story by: Justice Abeeku Newton-Offei
Office of the President