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 Public Financial Management (PFM) Act, its regulations and the State Interests and Governance Authority (SIGA) Act.
“In consultation with the Minister for Public Enterprises, 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 said.
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 government agencies which have consistently posted aggregate net losses from FY2015 of GH¢2.16billion to FY2020 of GH¢5.34billion, resulting in a compounded annual growth rate of 16.32 percent. “In preparing the 2020 State Ownership Report, our analysis revealed that our Specified Entities’ performance has largely trended downward.”
Currently, there are 183 Specified Entities on government books, consisting of 51 State-Owned Enterprises (SOEs), 43 Joint Venture Companies (JVCs), and 89 Other State Entities (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. 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 respectively. 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.
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.
Also present at the event was President 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 cited conflicting objectives, dispersed monitoring systems, lack of transparency and weak lines of accountability as 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 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 promote rapid growth of the economy. He also strongly advised: “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 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 the challenge of lacking 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 effort, 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 sharpening operational efficiency and effectiveness, and helping to secure investment.
“We are under no illusion that these tasks involving 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.