While privately owned businesses are generally doing well and posting juicy regular profit, our state-owned enterprises, SOEs, continue to register losses. This has been the unfortunate phenomenon for decades of their existence.
Despite the many measures governments over the years have put in to rectify the situation, they still made a loss of GH¢1.29 billion last year though this appears to be a marginal improvement over their 2016 performance.
Many reasons have been adduced for the situation though the most significant has been their inability to contain costs as their aggregate operating cost increased by 56.5 per cent last year.
According to the State Ownership Report which made this revelation, government’s fiscal exposure to the SOES amounted to GH¢8.23 billion of outstanding on-lent loans which government contracted on their behalf or with sovereign guarantee.
Some of these SOEs are defying some laws as far as submission of audited accounts are concerned. There is evidence that only 48 out of the 86 entities repeatedly contacted by the Ministry of Finance submitted requested information, while some have not submitted their 2017 audited financial reports as at April this year. This, according to the report, is against the Public Financial Management Act (PFMA) 2016 (Act 921).
This is not the first-time issues have been raised about the performance of SOEs. When one queries their performance over the years, one can always point to their management which has not lived up to expectation.
As business enterprises that are to make profit and pay the loans government procured for them, one expects their management to realise that they must handle the business as their personal investments hence they will ensure that rules governing running of businesses are made to apply. Unfortunately, this has not been the case. While private businesses thrive, those supported by the state are floundering.
For us at Goldstreet Business, we believe part of the blame lies with government itself. The SOEs have been turned into appendages of political parties who entrust management not to the most competent but rather an avenue to reward party members. Competence is therefore sacrificed on the altar of political patronage; while unnecessary and irrelevant procurements are made creating a huge avenue for corruption and outright thievery.
With this mindset, political appointees to these positions are not answerable to the board but rather to their political godfathers who ensure that they remain at post to do their bidding.
If the SOEs were privately owned, we believe their boards will not be happy reading this report and definitely, they will initiate actions that will see the management removed; radical measures will be introduced to correct what has gone wrong. Definitely the private business will introduce new guidelines to avoid a repetition of factors that led to the loss.
Having made the startling revelations, one expects government to hold someone accountable for the lapses which culminated in this embarrassing situation. Unfortunately, this does not happen in our part of the world – on an annual basis, these losses are sustained and citizens are asked to pay more taxes to rescue the SOEs.
It was the perennial occurrence of these losses that led to the divestiture of some of these enterprises setting the tone for the massive unemployment situation the country is facing.
Concluding, we hasten to say that government should re-think its support for these enterprises. Let them perform their tasks and from the results they can take care of their needs. Continuing to subsidise them will not take them out of the dependency mode.