A total of 19 state-owned enterprises (SOEs) and joint venture companies (JVCs), spanning critical sectors such as energy and agriculture, are facing deepening financial distress and have been identified for restructuring as authorities seek to curb fiscal risks and improve efficiency.
The mounting operational losses threaten to widen fiscal deficit, weaken investor confidence and strain government’s ability to meet its debt obligations. Left unaddressed, these inefficiencies will not only prolong ongoing economic challenges but also undermine the structural adjustments needed to restore stability and growth.
The Finance Minister, Dr. Cassiel Ato Baah Forson, made this known at the National Economic Dialogue in Accra last week, underscoring the situation’s severity.
Among the most troubled entities is Ghana Cocoa Board (Cocobod), which has seen its financial liabilities balloon to US$1.2billion since 2021. The agency, tasked with regulating and financing the country’s cocoa sector has struggled to meet forward contract obligations amid a steep decline in production.
In fact, Ghana has witnessed a nearly 50 percent drop in cocoa output over the past three years, creating a severe cash crunch for Cocobod. The agency remains heavily indebted, with additional revenue losses of US$840million stemming from lower-than-expected prices locked into forward sales contracts.
The financial turmoil has been exacerbated by smuggling activities, as wide price differentials between Ghana and neighbouring countries – such as Côte d’Ivoire – have pushed cocoa beans across borders.
The Electricity Company of Ghana (ECG), another key SOE under scrutiny, continues to grapple with operational inefficiencies and mounting financial losses.
The company collects for only 62 percent of the electricity it distributes; and of that, just 65 percent is used to settle payments to suppliers through government’s Cash Waterfall Mechanism. This inefficiency has contributed to the energy sector’s broader financial instability, which now carries an annual deficit of about US$2.2billion – and unpaid legacy debts stood at US$1.3billion at the end of 2022. Without urgent interventions, the cumulative energy sector shortfall is projected to exceed US$9billion by 2026.
Consequently, government is prioritising reforms aimed at reducing inefficiencies and restoring financial stability in SOEs. One of such include tightening oversight of operational expenditures and phasing out non-essential subsidies.
The broader fiscal impact of SOE inefficiencies remains a major concern. Government’s reform drive aligns to discussions with Ghana’s international creditors under the IMF-supported programme.
