SOEs are generating losses – Senior Minister laments

Yaw Osafo-Maafo, Senior Minister

The Senior Minister, Yaw Osafo-Maafo has bemoaned the inefficiencies in the operations of most State-Owned Enterprises (SOEs), which do not make dividends proportionate to the level of government investments.

Speaking at the 2018 SOE policy and governance forum held in Accra on Wednesday, Osafo-Maafo said, “dividends are paid by many of you, …but what we are getting out of you does not commensurate with the volume, the type and the size of investment we have made in you.”

According to the 2017 State Ownership report, SOEs made a total of GHS 259.5 million as dividend payment to government, notwithstanding that a total on-lent loans of GHS 8, 226.8 million is outstanding as at 2017.

“It is not going to declare dividend and giving the government GHS100,000, when indeed the size of the equity of government in that business, should have given the government GHS 5 million,” he stated.

The report interestingly showed that the SOE sector recorded an aggregate net loss of GHS 310 million, which even represents an improvement of the last two years figures.

It further highlights a seemingly chronic inability of SOEs to contain cost, with aggregate operating cost of SOEs increasing by 56.5 percent, at GHS 22.82 billion in 2017.

“This is of concern given that inflation and interest rates have been on a downward trajectory,” said Osafo-Maafo, adding, “so, we have a very serious challenge on return on investment.”

From the report, only GHS 29 million out of GHS 1, 159.8 million of debt service due were honored, representing a repayment rate of 2.5 percent. Also, GHS 394.44 million was transferred to nine agencies, during the period.

These show the level of significant fiscal exposure of government to the SOEs sector.

Osafo-Maafo noted that there is highly unsatisfactory compliance by SOEs and Joint venture companies to reporting and disclosure provisions in legislature and regulatory requirements governing their operations.

According to the report, only 48 out of the 86 entities repeatedly contacted by the ministry of finance submitted the requested information.

He expressed concern that, no SOE including the 33 covered in the 2017 report had submitted their 2017 audited financial report as at end of April 2018, contrary to the reporting requirements stipulated in the Public Financial Management Act, 2016 (Act 921).

By Joshua W. Amlanu