SOEs performance (1983–2025)

The Role of State-Owned Enterprises (SOEs) in Economic Development

State-owned enterprises (SOEs) can boost economic growth and job creation. They often operate in key sectors like energy, transportation, and telecommunications. In developing economies, SOEs fill gaps where private sector investment is lacking.

SOEs stabilize markets by ensuring essential goods and services are available. They also make strategic investments that support long-term economic stability. Additionally, SOEs generate revenue for governments through taxes and dividends.

For instance, BOST made profits of GHS161 million in 2021 and GHS360 million in 2024. If 100 SOEs combined made a profit of GHS100 million, the fiscal impact would be significant.

SOEs also contribute to social development by providing public goods. This includes rural electrification, public transport, and healthcare services. To maximize their contributions, SOEs should improve efficiency and governance practices.

Chronology of SOE Reform Initiatives (1983–2025)

The table below summarizes key initiatives since 1983:

| Year | Initiative | Government | Description |
|------|------------|------------|-------------|
| 1983 | Structural Adjustment Program (SAP) | PNDC | IMF-backed reform to reduce SOE burden via privatization. |
| 1987 | State Enterprises Commission (SEC) | PNDC | Created to oversee SOEs; introduced performance contracts. |
| 1993 | Divestiture Law (PNDC Law 326) | NDC | Formalized SOE privatization via DIC. |
| 2003 | Financial Admin & Procurement Acts | NPP | Strengthened fiscal discipline for public institutions. |
| 2016 | Public Financial Management Act (Act 921) | NDC | Required timely financial reporting by SOEs. |
| 2017 | State Ownership Reporting Initiative | NPP | First formal report published for SOEs. |
| 2019 | SIGA Act (Act 990) | NPP | Created SIGA to govern all specified entities including SOEs/JVs. |
| 2020 | Performance Contracts & League Table | NPP | Mandated KPIs for SOEs; published rankings based on performance. |
| 2023 | Ownership Policy & Governance Code                                                                                                                                  (NPP)| Codified state ownership rules and board practices.|
| 2025 | Code of Conduct for Public Officers (NDC)| Accountability framework for SOE leaders.|

Key Historical Reforms

In 1983, Ghana launched an IMF-backed Structural Adjustment Program under the PNDC government to reduce inefficiencies in state-owned enterprises.

In 1987, the State Enterprises Commission was established to oversee these enterprises and introduce performance contracts.

By 1992-1993, as Ghana transitioned to democracy, the government required all SOEs to incorporate as limited liability companies.

From 2001-2008, the New Patriotic Party accelerated privatizations but many enterprises remained loss-making.

In 2019, SIGA was established to monitor all specified entities on behalf of the government.

By 2020, all significant state entities were under SIGA’s oversight with improved financial reporting compliance despite COVID-19 challenges.

Annual Performance of SOEs from 2016–2024

This section outlines year-by-year data on Ghana's state-owned firms:

- In 2016, there were about 49 major entities with a net loss of GH¢2.12 billion.
- By 2019, this number rose to 106 entities with losses ballooning to GH¢5.16 billion.
- In 2020, despite COVID-19 impacts, revenues surged to GH¢45.23 billion but losses remained at GH¢2.61 billion.

The trend shows gradual improvement in financial reporting compliance over the years but persistent losses remain a challenge.

Causes of Underperformance

Despite reforms, many Ghanaian SOEs continue to struggle due to several factors:

1. Weak corporate governance leads to poor accountability.
2. Political interference disrupts long-term planning.
3. Financial mismanagement results in operational inefficiencies.
4. Pricing policies keep tariffs below cost-recovery levels.
5. High debt burdens create fiscal risks for the government.
6. Fragmented oversight complicates management objectives.
7. External market constraints affect profitability.

Recent interventions aim at addressing these issues through better governance frameworks and accountability measures.

In summary, improving governance and financial discipline is crucial for enhancing the performance of Ghana's state-owned enterprises moving forward.