Editorial: SOEs need bitter sanction

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Editorial: SOEs need bitter sanction
Photo: Ken Ofori Atta, Minister of Finance

Finance Minister Ken Ofori-Atta has lamented that for the past six years 47 public enterprises have not submitted any financial statements to his ministry, in stark contravention of the Public Financial Management (PFMA) Act 921.

Mr. Ofori-Atta disclosed that only 14 out of 129 State-Owned Enterprises (SOEs) and Other State Entities (OSEs) responded to the requirements of section 93 of Act 921 to submit quarterly reports on their operations.

Speaking at the 2021 Performance Contract Signing Ceremony, the minister stated that there is therefore need for a renewed performance contract between the state and its enterprises. Indeed, if the economy is to recover from ravages of the COVID-19 pandemic, there is a need to pursue accountability, transparency and responsible custodianship.

Public enterprises are not vehicles to enrich individuals, and this growing sub-culture of side-stepping good corporate governance rules for narrow, parochial self-interest must not be countenanced in our body-politic.

The value of state enterprises is estimated at GH₵110billion, which represents approximately 27 percent of 2020 GDP. This means a 10 percent return on assets could generate GH₵11billion to the national coffers, and SOEs should be employing more than 700,000 in the public and civil service.

Mr. Stephen Asamoah-Boateng, Director-General of the State Interests and Governance Authority (SIGA), has disclosed that six SOEs are currently being sanctioned for their persistent disregard of the Public Financial Management Act (PFMA).

However, we are of the conviction that it is not punitive enough since the practice appears to be entrenched. How is it possible that state-owned enterprises that we all collectively have a stake in can flagrantly flout submitting their financial statements for close to six years without any implications/consequences?

We do not believe we need to re-invent the rules and regulations, since section 93 of Act 921 requires these entities to submit quarterly reports to the Finance Ministry. There must be prescribed sanctions for entities which flout these provisions, and we expect the law to take its course in that regard.

Mr. Asamoah-Boateng’s outfit must be up and doing, and ensure the proper thing is done in the interest of the state – because we cannot have a situation wherein state entities operate in the dark. Such non-compliance by state corporations should not be treated with kid-gloves.

The managers of such entities must be held responsible to serve as a deterrent to others, illustrating that they will be held accountable.

Taxing e-commerce now could prove counter-productive

The E-commerce Association of Ghana is kicking against the introduction of taxes on the sector in the mid-year budget review.

The association argues the industry is a fledgling one which rather needs support to grow. In a bid to improve domestic revenue mobilisation, there have been calls to introduce taxes on the activities of e-commerce in the country – given its sudden boom during the pandemic when most businesses have adopted online marketing with huge patronage from clients.

The Ghana Revenue Authority also indicated earlier in the year that among its 2021 strategies are plans to introduce an e-commerce tax, as part of efforts to boost domestic revenue mobilisation. That notwithstanding, the association feels any such move is too early.

The association argues that it took the impact of the pandemic for it to stand on its feet, since it has struggled over the years to trade online.

Secretary General of the Association, Anita Wiafe Asinor, says the sector is still evolving and that proper infrastructure, regulation and an understanding of how it operates should take priority over the idea of slapping it with tax.

“What we require from government is the infrastructure, regulations and policies to support the sector,” Asinor posits. She expressed worry about the perception that an increase in use of social media platforms for marketing by businesses means the e-commerce industry is making huge profits.

Any tax introduced, she notes, must be fair to the industry and should not stifle the burgeoning industry’s growth.

The outbreak of pandemic shows the sector holds a lot of promise; however, there are still technological challenges which need to be addressed for the sector to be considered viable and thriving.

Nowhere else has unprecedented and unforeseen growth occurred as much as in the digital and e-commerce sectors, which have boomed amid the COVID-19 crisis. Amid slowing economic activity, COVID-19 has led to a surge in e-commerce and accelerated digital transformation.

That is why we understand the opportunity presented by e-commerce to boost domestic revenue mobilisation and that the GRA wants to seize the opportunity. However, we also understand the position of the Association since e-commerce is still in its infancy here in Ghana, hence the need to proceed cautiously.

Source: www.thebftonline.com

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