Government is seeking to raise over GH¢2 billion by listing 15 targeted State-Owned Enterprises (SOEs) in order to make them profitable and attractive to investors, Deputy CEO of Ghana Stock Exchange (GSE), Ms. Abena Amoah has said.
The GSE, according to Madam Amoah, has entered into a formal partnership and is currently working with the Ministry of Public Enterprises and State Interest and Governance Authority (SIGA) to ensure that the initiative comes to fruition through assessment of the SOEs to ensure that they are investment ready.
Speaking to the B&FT at the 10th edition of Ghana Economic Forum (GEF) in Accra, she said, the 15 enterprises, has been assessed with high prospects of returns on any such investments.
The GSE noted that its analysis and assessment shows these 15 companies are currently doing well among some 100 SOEs and listing them on the exchange will be very attractive to investors to easily raise the targeted amount.
“The discussions on timeframe are ongoing and what we are waiting for is the formal government approval of the first group of SOEs. We are waiting to start working with their advisors and to list them on the market,” she said.
Indeed, the GSE, since the last three years, in 2018, after listing of MTN through an IPO, has not made any significant listing on the market through any public offer. That listing, registered a record amount of over GH¢1 billion.
Madam Amoah said one of the reasons for the need to list and float shares is to securitize revenue sources of these SOEs and to enable them to raise capital from the public for operations and not burdening government for financing purposes.
The listing, according to her, will also enable government not to borrow funds to operationalize and finance activities of these SOEs.
“More importantly, the upcoming listing would also strengthen and improve corporate governance of these SOEs through strong management boards, continuity in management and sustainable financing,” she said.
Performance of SOEs
SOEs are key features of Ghana’s economy and can be sources of fiscal risks to the country’s public finances. Unfortunately, most these entities, in a long while, tend to underperform due to a variety of factors, including fundamental problems in their governance, failing to operate like modern, autonomous and professionally run companies.
While the total 126 of Ghana’s SOEs is valued at GH¢110 billion, representing approximately 27 percent of the nation’s 2020 gross domestic product (GDP), almost all of these companies have been making losses in the last years.
As of the end of 2019, an aggregate net loss of GH¢586.4 million was recorded in the SOEs sector, and this compares to a loss position of GH¢188 million in 2018
Indeed, between 2015 and 2019, SOEs have consistently posted negative operating margins, averaging around 10 percent.
However, prudent management to generate 10 percent return on the assets can generate GH¢11 billion to the national coffers and the enterprises. This could result in the employment of more than 700,000 people in the public and civil service.