A Deputy Minister for Finance, Dr John Kumah, has warned that the Finance Ministry will not support state agencies that fail to meet the reporting requirements specified in the PFM Act, PFM Regulations, and the SIGA Act.
He made this statement at the annual Policy and Governance Forum organised by the State Interests and Governance Authority (SIGA) under the theme: “Improving Performance of Specified Entities; Leadership and Technology”.
According to him, the move has been necessitated by the abysmal performance of some of government agencies who have consistently posted aggregate net losses from FY2015 (G.H. ¢2.16 billion) to FY2020 (G.H. ¢5.34 billion), resulting in a compounded annual growth rate of 16.32 percent.
He said: “In preparing the 2020 State Ownership Report, our analysis revealed that our Specified Entities’ performance has largely trended downwards.”
Currently, there are 183 Specified Entities on government books, consisting of 51 SOEs, 43 JVCs, and 89 OSEs. “This is a tall list of entities in which the state has interests, and one would have hoped returns on Government’s investments in them would have been a positive story”, he added.
Dr John Kumah revealed that, of the 44 SOEs and 16 JVCs covered in the draft 2020 SOE Report, 50 percent (22 SOEs) and 63 percent (10 JVCs) reported losses. Again, of the 56 OSEs covered, 34 percent (representing 19 OSEs) posted deficits.
“It is regrettable that while our Specified Entities, especially SOEs, hold significant assets, their performance and effectiveness leave much to be desired. Personally, it has been pretty distressing to participate in this Forum every year since 2017 while witnessing the overall decline in performance reported by our Specified Entities” he bemoaned.
The State Interests and Governance Authority (SIGA) was established to ensure adequate oversight and management of our Specified Entities.
Although some Specified Entities, particularly OSEs, submit their audited financial statements directly to the Auditor-General, the Minister noted that as of the end of December 2021, only 31 out of 51 SOEs (61 percent), 22 out of 89 OSEs (25 percent), and 22 out of 43 JVCs (51 percent) had submitted audited financial statements for FY2020 to the Finance Ministry.
“In consultation with the Minister for Public Enterprises, Hon. Joseph Cudjoe, I have directed the Director-General of SIGA to ensure that appropriate sanctions and penalties are applied for infractions of the PFM Act, PFM regulations, and SIGA Act, including a recommendation for removing members of governing bodies”, he concluded.
Also present was the President of the Republic, Nana Addo Dankwa Akufo-Addo, who noted that this year’s forum highlights some critical ingredients required to turn around the fortunes of specified entities.
He acknowledged that historically, Ghana has had difficulty in fashioning out a comprehensive strategic approach to managing the sector of Specified Entities. He sighted conflicting objectives, dispersed monitoring systems, lack of transparency and weak lines of accountability as the symptomatic of Ghana’s underperforming sector.
“Upon assumption of office, we had to spend a significant amount of our time addressing the challenges that we have inherited from our predecessors which almost crippled the specified entities. These included legacy debts, low working capital, weak corporate governance structures with overlapping and conflicting objectives however the establishment of SIGA has helped resolve some of these concerns”, he added.
President Akufo-Addo said government is doing its best to seek the rapid growth of the economy. He also strongly advised that “We must bring the phenomenon of posting losses to an end. We have to turn over a new leaf beginning this year. I urge every Specified Entity to direct its supply chain activities to involve Ghanaian entrepreneurs to spur the growth of the Micro, Small and Medium Scale Enterprises sector in order for more young people to be employed.
On his part, the newly appointed Director General of the SIGA, Ambassador Edward Boateng noted that the there is a challenge of a lack of policy coherence among State institutions. He cited that conflicting policies and actions across government agencies, departments and Specified Entities have blurred the common goal and resulted in turf wars, duplication of efforts, delays and high cost of doing business.
He proposed that streamlining existing policies or introducing new clear ones that help address these and other legacy issues will be an important first step to sharpen the operational efficiency and effectiveness and help secure investment.
“We are under no illusion that these tasks of effective oversight of Specified Entities will be easy, as every status quo has its beneficiaries who will struggle mightily to retain their privileges to the detriment of our polity. However, these tasks devolve from the responsibility that H.E the President has conferred upon me, and with his support, I will do my utmost to vindicate the trust that he has placed in me. We will sanction people and those who do not perform will be fired”, he assured.
