…new Authority to replace SEC
Parliament is set to pass the State Interests and Governance Authority (SIGA) Bill into law in the next couple of months to address the challenges facing a number of State Owned Enterprises (SOEs) following its adoption by the legislature early this month.
This has become necessary because none of the interventions initiated to improve the financial performance of SOE’s have had the intended impact they were meant to achieve.
The purpose of the adoption of the SIGA Bill is to establish a single entity to efficiently manage the interests of the State in SOEs, Joint Venture Companies (JVCs) and other state entities including regulatory bodies. This measure will harmonize guidelines to oversee and administer the activities of state enterprises that would in turn ensure greater transparency and ultimately, better financial performance.
In 2017, the latest year for which a State Ownership Report has been compiled, the 33 SOEs and 16 Joint Ventures, who submitted information as requested by the Ministry of Finance (out of 86 entities asked to submit information) generated a cumulative loss of GHc1,29 billion. This was caused primarily by rising operating costs which, on aggregate, climbed by 56.5 percent in 2017 alone. Furthermore by the end of that year, government’s total indebtedness on their behalf through on-lending and sovereign guarantees amounted to GHc8.23 billion.
The coming into effect of SIGA will result in the establishment of an Authority which would enhance co-ordination in the management of state interests, ensure accountability on the part of SOE’s, boost financial performance and enhance profitability of the entities. This means that the State Enterprises Commission (SEC) will henceforth be scrapped and replaced with the impending new state entity.
The move is part of policy reforms which aim at streamlining and centralizing government’s fragmented framework for managing the interest of the State in the specified entities, particularly SOEs.
The policy reform is expected to improve and strengthen the governance oversight responsibilities of SOE’s and JVCs. This forms part of measures to mitigate fiscal risks geared towards reforming the governance structures of all state entities.
The SIGA Bill which was submitted to parliament by mid-March this year has currently gone through the second stage of reading and it is expected that when all the parliamentary procedures have been fulfilled and approved the president would sign it into law, possibly by mid year.
According to the 2017 State Ownership Report, the new Authority is expected to create a central point for all state agencies to receive approval for all their operations as this measure would provide a platform for the SOEs to be managed efficiently.
It is expected that the SIGA will oversee three categories of entities namely SOE’s, JVC’s and other state entities.
By Dundas Whigham