Ephraim Ofori Numosuor
Ghana’s state-owned enterprises (SOEs) have long been a drain on national resources rather than a driver of economic prosperity. According to the 2022 State Ownership Report by the Ministry of Finance, Ghana’s SOEs recorded a cumulative loss of GHS 5.3 billion in 2021 alone, with major institutions like the Ghana Cocoa Board (COCOBOD) and the Electricity Company of Ghana (ECG) posting staggering deficits. COCOBOD, despite Ghana being the world’s second-largest cocoa producer, has been running losses due to mismanagement, excessive borrowing, and corruption. Similarly, ECG continues to struggle with inefficiencies, including illegal power connections and unpaid bills, leading to revenue losses of over GHS 2 billion annually.
The reality is that SOEs should be national assets, not liabilities. If private companies can thrive in the same sectors where SOEs struggle, then the issue is not the business environment; it’s the way these institutions are run. To make Ghana’s SOEs profitable, we need a radical shift in mindset, leadership, and operational strategies. Here’s how:
- Professionalize Leadership, Not Politicize It
Too often, SOE leadership is determined by political affiliations rather than competence. This must change. We need seasoned business leaders with track records of success, not party loyalists with no industry experience. For example, Singapore’s Temasek Holdings, a state-owned investment company, has achieved remarkable success because its leadership is composed of experienced finance and business executives rather than political appointees. Ghana can learn from this by implementing strict merit-based criteria for selecting SOE executives, ensuring they possess the required expertise and have a history of delivering financial results.
- Cut Bureaucratic Waste and Improve Efficiency
Many SOEs operate with bloated workforces and inefficient processes that cripple profitability. A 2020 report by the State Interests and Governance Authority (SIGA) revealed that payroll expenses account for over 60% of some SOEs’ total expenditures. A case in point is Ghana Post, which, despite the rise of digital communication and private courier services, still maintains a workforce much larger than operationally necessary. The solution? Restructuring payrolls, investing in automation, and streamlining operations to ensure efficiency. Ethiopia’s state-run Ethiopian Airlines, one of Africa’s most profitable airlines, has achieved global competitiveness by maintaining lean operations and eliminating wasteful spending.
- Hold Leaders Accountable for Financial Performance
Every SOE should be required to publish audited financial statements and justify their expenditures. Executives who fail to deliver profitability should be held accountable, just as they would be in the private sector. Rwanda provides an excellent example, where the government has enforced performance contracts for SOE managers, tying their tenures to specific financial and operational targets. If these targets are not met, replacements are made. Ghana should adopt a similar approach by making performance-based contracts a legal requirement for all SOE executives.
- Adopt Private Sector Business Models
The government must stop treating SOEs as mere social service providers and start running them like businesses. This means setting clear revenue targets, diversifying income streams, and optimizing pricing strategies to maximize returns. ECG, for instance, must find innovative ways to recover debts and minimize electricity losses rather than relying on periodic tariff hikes. The China National Petroleum Corporation (CNPC), for example, has successfully balanced its national service obligations with commercial profitability by implementing cost-effective pricing models and diversifying its operations to include global investments in energy infrastructure.
- Encourage Strategic Public-Private Partnerships (PPPs)
Instead of government solely shouldering the burden of running SOEs, strategic partnerships with private sector players can infuse much-needed capital, efficiency, and innovation. Many successful economies leverage PPPs to revitalize struggling state assets. In Nigeria, for example, the Lekki Deep Sea Port project, a public-private partnership, has helped modernize port infrastructure while reducing financial burdens on the government. Ghana should explore similar partnerships, particularly in the energy and transportation sectors, where inefficiencies continue to undermine profitability.
- Eliminate Political Interference in Operations
SOEs are often used as political tools, leading to reckless financial decisions and unsustainable policies. Governments must allow these institutions to operate with independence, focusing on long-term profitability rather than short-term populist moves. The success of Brazil’s Petrobras, a formerly struggling SOE, can be attributed to reforms that reduced political meddling and allowed professionals to make sound financial and operational decisions. Ghana must enforce similar structural reforms to ensure SOEs operate with minimal political interference.
- Enhance Corporate Governance and Transparency
Strong governance structures are key to preventing corruption and inefficiency. Boards should be composed of experienced professionals, not political cronies. Transparent procurement processes and financial reporting should be enforced to prevent mismanagement. Malaysia’s Khazanah Nasional, a state investment fund, has successfully ensured profitability in SOEs by implementing robust corporate governance standards that enhance transparency and prevent political manipulation. Ghana can take inspiration from this model to restore accountability in SOEs.
- Leverage Technology for Modernization
From COCOBOD to ECG, many SOEs still rely on outdated systems that hinder efficiency. Investing in technology can streamline operations, improve customer service, and increase revenue collection. For example, Kenya’s government-owned mobile money platform, M-Pesa, has transformed revenue collection for public services, reducing leakages and increasing efficiency. Ghana can implement similar tech-driven solutions to digitize revenue collection for entities like ECG and the Ghana Water Company Limited (GWCL).
The Bottom Line
Ghana’s SOEs do not have to be perennial loss-makers. With the right leadership, strategic direction, and commitment to operational efficiency, they can become major contributors to national revenue. It’s time for bold reforms. Ghana deserves profitable, well-run enterprises that work for the people, not against them. The government, policymakers, and citizens must push for a paradigm shift, one that ensures SOEs generate wealth, not waste it.
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