By Emmanuel ACQUAH-SAM
Ghana’s state-owned enterprises (SOEs) have faced a persistent financial crisis over the past decade, marked by chronic losses and structural inefficiencies. From 2015 to 2019, SOEs recorded average negative operating margins of 10%, with cumulative net losses rising to GH¢586.4 million in 2019, up from GH¢188 million in 2018 (Citi Newsroom, 2021, July 12). Losses deepened in 2020 to GH¢2.61 billion, an improvement from GH¢5.16 billion in 2019 but still reflective of systemic weaknesses (Ministry of Finance, 2021). ‘
The situation worsened in 2021 and 2022. ECG and COCOBOD posted losses of GH¢1.46 billion and GH¢2.4 billion, respectively, in 2021, which increased to GH¢8 billion and GH¢3.8 billion in 2022. GIHOC Distilleries also reported a GH¢25.1 million loss (Graphic Online, 2025, April 6). In 2023, the ten largest SOEs posted a combined net loss of GH¢11 billion, with ECG alone responsible for GH¢10 billion.
GWCL added another GH¢3 billion loss (Citi Newsroom, 2025, March 19). By 2024, SOEs recorded a GH¢8.54 billion post-tax loss as operating expenses (GH¢105.54 billion) exceeded total revenue (GH¢103.79 billion), yielding a cost recovery ratio of 0.99. Only three SOEs—State Housing Company, Ghana Reinsurance Company, and TDC—paid dividends totaling GH¢28.7 million (Graphic Online, 2025, April 6).
Underlying these outcomes are rising operational costs, persistent financial infractions, and the underperformance of major SOEs. From 2014 to 2023, financial irregularities among SOEs and public institutions totaled GH¢99.57 billion, including GH¢74.67 billion in debts and loans, GH¢7.47 billion in cash irregularities, and GH¢17.43 billion in other administrative lapses (Audit Service Ghana, 2024). The 2022 Auditor-General’s report cited GH¢15.06 billion in irregularities, mainly due to poor debt recovery and loan management (Joy News, 2024, March 18), while the 2023 report identified GH¢8.8 billion in further infractions (Audit Service Ghana, 2024).
The Ghana Center for Democratic Development (CDD-Ghana) attributed the persistent losses to poor governance, inefficiency, and weak transparency, calling for reforms to corporate oversight (CDD-Ghana, 2024). The 2023 State Ownership Report by SIGA confirmed widespread inefficiencies and called for restructuring (SIGA, 2024). The 2025 Budget Statement outlined fiscal interventions and reforms aimed at restoring SOE viability (Ministry of Finance, 2024).
Within the broader crisis of Ghana’s SOEs, this paper critically examines the Cocoa Processing Company (CPC), which now faces stark choices: shutdown, divestiture, or institutional turnaround.
Once a symbol of Ghana’s value-addition ambitions in cocoa, CPC stands at a financial crossroads. As reported by Zurek (2025) in Graphic Business (May 4), CPC posted a Q2 2025 net loss of $4.07 million, an improvement over the $6.33 million loss a year earlier, but still unsustainable. Despite quarterly revenues of $12.74 million, the company recorded a gross loss of $743,315, as cost of sales reached $13.49 million.
Administrative and finance costs added $3.6 million, while cash reserves dropped to $3.2 million, highlighting CPC’s fragile operational footing. This comes amid optimism over an $86.7 million loan facility from Afreximbank intended for debt restructuring and capacity expansion. However, experts warn that without internal reforms, the loan risks becoming a debt trap rather than a recovery tool.
From a managerial economics perspective, CPC is violating a fundamental survival rule: a firm must cover its variable costs to remain operational in the short run. CPC’s negative gross margin signals that the more it produces, the more it loses, a classic case of pricing below variable cost. Structural inefficiencies, including high input and energy costs, underutilised capacity, outdated equipment, and weak management, render CPC’s production model inherently loss-making.
Its pricing strategy fails to reflect input costs or market dynamics, embedding losses into its operations. Without systemic cost controls and operational restructuring, CPC’s financial decline is likely to persist, regardless of external financing.
A Three-Way Strategic Choice for CPC
Policymakers and CPC’s management now face three broad options: initiate a structured turnaround backed by external financing, implement a temporary shutdown to stem losses and regroup, or proceed to a full market exit through liquidation or divestiture.
Turnaround with Afreximbank Loan Conditions
At the heart of the turnaround proposal is the Afreximbank loan. If successfully secured, the facility would inject desperately needed liquidity into CPC. However, any financial bailout must be tied to stringent reforms to ensure it leads to a sustainable recovery rather than temporary relief.
A key reform involves the renegotiation of supplier contracts and input pricing. CPC must reassess its procurement arrangements to secure more favourable terms and reduce its cost base. This could entail engaging in competitive sourcing, establishing long-term supply agreements, or leveraging the government’s negotiating influence to achieve cost efficiencies.
In addition to procurement reforms, CPC would need to downsize or retool its operations to better align with current demand and profitability levels. This might mean closing down unproductive lines, investing in more efficient machinery, or streamlining the workforce to eliminate redundancies.
The objective is to build a leaner and more responsive operational model that reflects market realities while preserving core capabilities. Another critical component of the reform package is the installation of new corporate governance frameworks. Past failures at CPC were in part due to weak oversight, politicised decision-making, and lack of accountability.
A revamped governance structure, comprising an independent board, clear reporting lines, and enhanced transparency, would be essential in restoring stakeholder confidence and preventing a repeat of past mismanagement.
Modernising production through automation also features prominently in the proposed turnaround strategy. By automating key stages of the production process, CPC can significantly reduce waste, improve quality control, and enhance overall efficiency. This shift toward technology-driven operations will also reduce human error and lower long-term operational costs, thereby improving margins. Finally, to ensure that reforms are not only initiated but sustained, CPC must commit to meeting clearly defined performance benchmarks.
These should be monitored regularly, either by the Ministry of Finance or a specially constituted oversight body with the authority to intervene where progress stalls. Without these firm conditions, the Afreximbank loan risks becoming just another stopgap measure, delaying the company’s inevitable collapse while compounding its debt burden. Ghana’s history with state bailouts of failing enterprises offers sobering reminders of the risks involved when reform is sacrificed for expediency.
Temporary Shutdown: Pause, Not Surrender
A temporary shutdown may sound radical, but it offers CPC a window to halt the bleeding. By suspending operations, the company could preserve its fixed assets, reassess its business model, and explore partnership or privatisation opportunities without the daily burden of loss-making production.
This approach would not mean abandoning the cocoa processing sector. Rather, it would signal a commitment to disciplined restructuring, a cooling-off period where tough questions can be asked and fundamental reforms mapped out. CPC’s brand, factory footprint, and industry experience still hold latent value, but only if a more rational economic model can be found.
Market Exit: A Difficult but Rational Call
If deeper reforms prove politically or technically unrealistic, a clean exit becomes the rational economic decision. This could mean selling off assets to private players, inviting strategic investors, or dissolving the enterprise altogether. A decisive exit would allow scarce public capital to be redirected toward more efficient and competitive sectors of the economy. Ghana’s cocoa value chain does not need to disappear, it can be revitalised through private-led investment that leverages innovation, global networks, and disciplined capital management.
Reforms Needed to Restore Efficiency, Accountability, and Public Trust in Ghana’s SOEs
To restore efficiency, accountability, and public trust in the operations of Ghana’s State-Owned Enterprises (SOEs), the following institutional reforms are necessary:
Strengthening Corporate Governance Frameworks: SOEs should adopt internationally accepted corporate governance practices, including the separation of ownership and management, clearly defined roles for boards of directors, and the institution of performance-based accountability. Board appointments should be merit-based rather than politically influenced, with independent directors ensuring oversight and strategic direction.
Enhancing Financial Transparency and Audit Compliance: All SOEs must be mandated to publish audited financial statements annually in compliance with International Public Sector Accounting Standards (IPSAS). The Auditor-General’s recommendations must be enforced with consequences for non-compliance. A centralized public SOE dashboard could enhance transparency and allow citizen monitoring.
Establishing an Independent SOE Oversight Authority: A technically competent, politically insulated body should be created or strengthened, such as reforming the State Interests and Governance Authority (SIGA), to oversee SOE performance, enforce standards, and implement reforms. This body must have clear legal authority and the capacity to hold executives accountable.
Depoliticising SOE Management and Appointments: Recruitment and leadership appointments in SOEs should be based on competitive, meritocratic processes with strict qualification and experience criteria. Politicisation has undermined institutional memory, morale, and long-term strategic planning. Legal safeguards are needed to prevent undue political interference.
Implementing Performance-Based Management Contracts: Managers of SOEs should sign binding performance contracts aligned with national development goals and subjected to periodic evaluation. These contracts should include measurable targets (e.g., profitability, service quality, and cost efficiency) and link remuneration to results.
Reforming Legal and Institutional Mandates: Some SOEs operate with outdated mandates or overlapping functions. A legal audit and rationalization of SOE mandates is necessary to eliminate redundancy, clarify roles, and ensure focus on core public objectives. This should be accompanied by reforms to increase operational autonomy within clearly defined policy boundaries.
Promoting Citizen and Stakeholder Engagement: Restoring public trust requires opening up SOEs to greater citizen scrutiny through stakeholder forums, annual public reporting, and accessible grievance redress mechanisms. Participatory oversight can increase legitimacy and transparency.
Instituting Anti-Corruption Measures and Internal Controls: SOEs must strengthen internal audit units, implement whistleblower protection policies, and integrate digital tools for monitoring procurement, inventory, and financial flows. Collaboration with anti-corruption agencies should be institutionalised.
Conclusion
CPC’s crisis is emblematic of a broader problem plaguing many state-owned enterprises (SOEs) in Ghana and across Africa, emanating from political interference, bloated cost structures, weak accountability, and overreliance on government bailouts. If Ghana is serious about SOEs reforms, CPC must become the test case for how distressed public firms are handled, rationally, transparently, and in the long-term interest of taxpayers.
The government must also learn to distinguish between strategic sectors and strategic firms. While cocoa is undeniably strategic for Ghana, this does not mean every cocoa-related entity should receive indefinite public support. Maintaining unviable firms in strategic sectors can hurt national competitiveness more than help it.
The crisis of Ghana’s SOEs underscores a central challenge in managerial economics: resource misallocation in the face of clear economic signals. Persisting with operations where price falls below AVC, or where financial and governance dysfunctions are chronic, is economically unjustifiable.
Strategically, the government must blend economic logic with pragmatic institutional reforms, underpinned by a willingness to shut down or exit unviable operations, restructure others, and insulate management from political capture.
The writer is the Dean, Faculty of Humanities and Social Sciences, Wisconsin International University College, Ghana.
