Privatise all SOEs to attain profitability as desirable – Economist advises gov’t
Adnan Adams Mohammed
With the current undesirable results posted by the State Owned Enterprises (SOEs), a ‘pillar’ in Ghana’s economist, Kwame Pianim, has called for the outright sale of some State Owned Enterprises (SOEs) to the private sector as part of the measures to mobilise revenue for the government.
The revered economist believes many of the SOEs, which have become losses making enterprises, needs to be sold to maximize profit in the wake of the economic difficulties faced by the country.
According to the 2020 State Ownership Report, the SOEs recorded a GH¢2.61 billion loss in 2020, although that was about 50 percent better over the 2019 aggregate loss of ¢5.16 billion. This has pushed the Finance Minister, Ken Ofori-Atta, to call on the managements of the SOEs for more urgent and collective work to address these losses. But, the economist stressed on his advises that, some SOEs over the years have been saddled with debt over issues of mismanagement among others.
“Many of these SOEs are continually adding to the liabilities stock of the government, Kwame Mpianim indicated. “Others are just liabilities to the state.”
According to the report, SOEs’ combined revenue increased by 19.30%, from ¢37.912 billion in 2019 to ¢45.23 billion in 2020.
With the exception of communications and transportation, all other sectors recorded improved revenue in 2020 relative to 2019.
On the other hand, direct costs incurred by SOEs collectively in 2020 was however ¢32.9 billion, representing a 12.65% increase from ¢29.213 billion in 2019.
The energy and agricultural sectors were the main contributors, accounting for over 80% of aggregate direct costs of SOEs in FY2020.
Total assets of the SOEs portfolio however stood at ¢171.632 billion, whilst aggregate liabilities recorded was ¢119.5 billion in 2020.
In comparison to 2019, the asset base grew by 15.12% with liabilities rising at a higher pace of 22.47%. Non-current assets accounted for approximately 65.81% of total assets.
For total liabilities, 57.37% was accounted for by short-term liabilities. Aggregate equity of the SOE portfolio went up marginally by 1.18% from ¢51.47 billion in 2019 to ¢52.085 billion in 2020
JVCs records ¢11.81m profit
Also, Joint Venture Companies (JVCs) portfolio moved from a loss position of ¢1.05 billion in 2019 to a profit of approximately ¢11.81 million in 2020.
Total revenue decreased by 5.82%, from ¢13.80 billion in 2019 to ¢13.005 billion in 2020.
Three out of the 17 JVCs, namely Ghana Rubber Estates Limited, Agricultural Development Bank and GCB, reported consistent increases in total revenue over the 5-year period under review. The energy sector, represented by GOIL, generated the highest total revenue (¢5.578 billion) for JVCs in 2020.
Contrary to the increasing trend between 2016 to 2019, direct costs of JVCs as a whole fell by 13.86% to ¢8.681 billion in 2020.
From 2016, it is observed that direct costs rose steadily from ¢7.274 billion to ¢10.079 billion in 2019.
Other State Entities
In 2020, Other State Enterprises (OSEs) recorded aggregate revenue of ¢19.361 billion, which is a 29.15% increase from the previous year.
In general, revenues have risen cumulatively by 27% from 2016 (¢9.153 billion) to 2020.
The increase in total revenue for 2020 was on account of improved performance from regulatory bodies, from GH¢9.198 billion in 2019 to ¢9.526 billion in 2020.
Revenue of statutory agencies increased from ¢3.586 billion in 2019 to ¢5.912 billion in 2020, while that of subvented agencies went up from ¢2.033 billion in 2019 to ¢3.805 billion in 2020.
Only the Public Education/ Research Institutions sub-group recorded a reduction in total revenue from ¢172.79 million in 2019 to ¢117.52 million in 2020.
The Minority Interests portfolio recorded an aggregate net profit of GH¢11.25 billion in 2020 against a net loss of ¢62.17 million in the previous year.
For revenue, aggregate revenue for Minority Interests entities amounted to ¢53.356 billion in 2020, which is an increase of 29.40%, from 2019 (¢41.234 billion).Over 80% of revenues were from the mining sector.
Direct Costs however saw a slight increase of 2.58%, from ¢28.781 billion in 2019 to ¢29.525 billion in 2020.
The 2020 State Ownership Report covered 132 Specified Entities which include SOEs, 17 JVCs, 54 OSEs and 14 minority interests.
This represents, approximately, a 24% increase in coverage of the report from the 2019 edition which covered 106 entities.
In terms of the size of the portfolio, this edition of the State Ownership Report has a wider coverage of 74.58% compared to 60.57% in the 2019 edition.