Revitalizing Ghana’s State-Owned Enterprises: Strategies for Profitability
Ghana’s state-owned enterprises have incurred significant losses, necessitating a transformation into profitable entities. Key reforms include professional leadership selection, cutting inefficiencies, enforcing accountability, adopting private sector models, and leveraging technology. Learning from successful global practices can guide these changes, ultimately enhancing national revenue contributions from SOEs.
Ghana’s state-owned enterprises (SOEs) have historically been a liability for the national economy rather than an asset. The 2022 State Ownership Report by the Ministry of Finance reveals that these entities incurred a cumulative loss of GHS 5.3 billion in 2021, particularly affecting major players such as the Ghana Cocoa Board (COCOBOD) and the Electricity Company of Ghana (ECG). COCOBOD’s losses stem from mismanagement and corruption, while ECG faces significant revenue losses due to inefficiencies.
To transform SOEs from financial drains to profit-generating assets, it is imperative to adopt a new mindset regarding leadership and operational methodologies. There are several actionable recommendations proposed for reforming these institutions, beginning with the professionalization of leadership. Selection criteria for SOE executives should focus on competency and experience over political ties, similar to Singapore’s Temasek Holdings which thrives under skilled management.
The elimination of bureaucratic inefficiencies is vital for improving SOE profitability. Reports show that payroll expenses can account for over 60% of expenditures in some cases. Ghana Post, for example, has an oversized workforce in the face of declining demand due to digital alternatives. Streamlining these operations can lead to significant savings. The successful model of Ethiopian Airlines demonstrates that maintaining lean operations can enhance global competitiveness and profitability.
Enhancing accountability for financial performance is another necessary step. Executives must be required to publish audited financial statements and face consequences for lack of profitability, akin to Rwanda’s performance contracts for SOE managers. Making success measurable will align SOE operations with those of the private sector and improve overall accountability.
It is also essential to adopt private sector business models for improved effectiveness. SOEs should not be regarded merely as social service providers; they must operate with clear revenue targets and diversified income streams. The China National Petroleum Corporation exemplifies this approach, balancing public service with profitability through innovative financial strategies.
Encouraging strategic public-private partnerships (PPPs) can further bolster SOE performance. These partnerships can bring in private sector expertise and financial resources, as demonstrated by Nigeria’s Lekki Deep Sea Port project, which enhances capital expenditure while relieving governmental pressure.
To ensure sound financial practices, it is crucial to eliminate political interference in SOE operations. By allowing these entities to function independently, akin to Brazil’s Petrobras reforms, Ghana can prevent rash financial decisions and create a focus on sustainable performance.
Robust corporate governance enhances transparency and deters corruption. The implementation of best practices in governance, as with Malaysia’s Khazanah Nasional, can provide a framework for accountability and efficient management of SOEs in Ghana.
Finally, leveraging technology to modernize SOE operations can significantly improve efficiency and revenue collection. Successful examples like Kenya’s M-Pesa showcase the benefits of utilizing technology for better financial management and customer service optimization. This approach could similarly assist in transforming institutions like ECG and Ghana Water Company Limited.
In summary, Ghana has the potential to turn its SOEs into profitable entities that contribute meaningfully to the national economy. By implementing comprehensive reforms focused on leadership, efficiency, accountability, strategic partnerships, governance, and technology, Ghana can ensure that its SOEs become valuable assets rather than costly burdens.
The transformation of Ghana’s state-owned enterprises into profitable entities requires a multifaceted approach emphasizing professional leadership, operational efficiency, accountability, strategic business models, and technological modernization. By learning from successful international counterparts and implementing the proposed changes, Ghana can shift from viewing SOEs as liabilities to recognizing their potential as significant contributors to national revenue. It is essential that all stakeholders advocate for and commit to these necessary reforms for lasting improvements.
Original Source: www.ghanaweb.com
