Support SMEs to grow - Akufo-Addo charges state businesses
President Nana Addo Dankwa Akufo-Addo has charged organisations in which the state has interest to involve indigenous micro, small and medium enterprises (MSMEs) in their direct supply chain activities.
When practised continuously for the next five years, it would spur the growth of MSMEs, create more employment for young people and impact a lot of lives, he said.
President Akufo-Addo gave the charge when he opened this year’s policy and governance forum of the State Interest and Governance Authority (SIGA) in Accra on Friday.
The forum, which was organised by SIGA in partnership with the Ministry of Finance and the Ministry of Public Enterprises, with support from the World Bank Group, was on the theme:
“Improving the performance of specified entities; leadership and technology.”
President Akufo-Addo indicated that the nation had difficulties fashioning a comprehensive strategic approach to manage the sector of state-owned enterprises and other companies in which the state has interest, otherwise known as specified entities.
He noted that conflicting objectives, dispersed monitoring systems, the lack of transparency and weaklings of accountability had been symptomatic of the sector's underperformance.
Addressing challenges
Since assuming office, the President said, his government had to spend a significant amount of time addressing challenges inherited from the predecessors which almost crippled the specified entities.
He mentioned some of the challenges as legacy debts, low working capital, weak corporate governance structures, and a multiplicity of stakeholder policy directives with overlapping and conflicting objectives.
Others were dispersed monitoring systems, adding that the establishment of SIGA had helped to resolve some of the concerns, even though there was room for considerable improvement.
President Akufo-Addo said the theme highlighted the importance of two critical ingredients required to turn around the fortunes of specified entities in an era when the country was working to recover from the ravages of COVID-19.
He, however, expressed concern about the continued losses being made by some specified entities, pointing out that between 2018 and 2019, losses posted by specified entities rose significantly by some 200 per cent with the Auditor General's report for 2020 making for difficult reading.
“Up till this time, government is doing its best to see to the rapid growth of the economy which must bring the phenomenon of posting losses to an end.”
“The late reporting and submitting of reports by specified entities leave a lot to be desired and undermine the efforts of the Controller and Accountant General in the presentation of a global picture for Ghana’s public finances. We have to turn over a new leaf,” President Akufo-Addo stressed.
He expressed the hope, however, that he would hear success stories by the next forum.
Minimise losses
The President also charged the entities to minimise losses and improve performance, explaining that his decision to appoint a minister for public enterprises for the first time in the history of the nation to be responsible for organisations and enterprises in which the state had interest, was an reaffirmation of his commitment to ensure that the public enterprises sector was restricted to improve productivity and profitability.
He was confident that measures instituted in the monitoring of specified entities would lead to the transformation desired.
“The task for all of you gathered here, is for you to operate profitably and efficiently and by so doing expand your scope of operations so that you can employ many more people. Your leadership to this end is crucial,” President Akufo-Addo stressed.
His expectation and that of every Ghanaian was to see that SIGA worked in tandem with the respected specified entities and their boards to assist in moving the country to a situation beyond aid, the President said.
He further urged the board members and management of SIGA to be the watchdogs in ensuring that the institutions under their jurisdictions lived up to their mandate.
“There should be no reason why SIGA, which had as its collaborative institution embedded in almost all the critical sectors of the economy such as energy, mining, agriculture, financial and allied services, information and communications technology (ICT) and regulatory agencies, should be found wanting in the discharge of its mandate.
President Akufo-Addo, therefore, advised them to leave their respective entities in a better position than they came to meet them.
Boateng enters, other exits
The President also used the occasion to congratulate the new Director-General of SIGA, Mr Edward Boateng, on his appointment and said he expected strong leadership from him.
He also thanked the former Director-General, Mr Stephen Asamoah Boateng, for the work he did from the initial stages of the authority, growing it into what it was today.
Policy incoherence
For his part, the Director-General of SIGA observed that there was lack of policy coherence among state institutions.
Such conflicting policies and actions across agencies, departments and specified entities, Mr Boateng said, had blurred the common goal and resulted in needless turf wars, duplication of efforts, delays and a high cost of doing business, among others.
He said streamlining existing policies and introducing clearer ones that would help address the challenges and other legacy issues would be an important first step to sharpen operational efficiency and effectiveness of the enterprises and help secure investment.
"Ghana is going digital and we must be part of it. We must leverage Ghana's digital transformation agenda to harness the potential of specified entities,” he stated.
Statistics
The Minister of Public Enterprises, Mr Joseph Cudjoe, said the country had 183 public enterprises on register, comprising 51 state-owned enterprises (SOEs), 43 joint venture companies (JVCs) and 89 other state entities (OSEs).
However, he said, a large number was yet to submit its management and audit accounts for the 2020 fiscal year.
Mr Cudjoe said other entities had not submitted theirs as far back as 2017, stressing that the specified entities needed to balance their books to achieve the needed economic growth for the country.
The minister charged the leaders to turn their entities into profitable ventures by making every effort to be part of those that were working for the economic good of the country.
Finance directive
A Deputy Minister of Finance, Dr John Kumah, said with the tall list of public enterprises, one would have hoped that the returns on government investments would be a positive story.
"Unfortunately, this is not the case. In preparing the 2020 state ownership report, analysis revealed that our specified entities’ performance has largely turned downwards," he noted.
The SOEs, Dr Kumah stated, had consistently recorded losses from GH¢2.1 billion in 2015 to GH¢5.3 billion in 2020, with a cumulative annual growth rate of 16 per cent.
Of the 44 SOEs and 16 Joint venture companies covered in the draft 2020 SOE report, the Deputy Finance Minister said 50 per cent and 63 per cent respectively recorded losses.
Of the 56 OSEs covered, 34 per cent posted deficits.
As of the end of December 2021, only 31 out of 51 SOEs, 22 out of 89 OSEs and 22 out of 43 JVCs had submitted audited financial statements for 2020 to the Finance Ministry, he said.
Due to the non-compliance of the entities to submit their statements, the Finance Ministry would not consider any request for government support to any specified entity that failed to meet the reporting requirement specified in the Public Financial Management (PFM) Act, 2016 and Regulations, as well as SIGA Act, 2019, Dr Kumah said.
Additionally, he said in consultation with the Minister of Public Enterprises, the Minister of Finance had directed the Director-General of SIGA to ensure that appropriate sanctions and penalties were applied against entities that went against the PFM regulations, including recommendations for removal of members of the governing boards.
Dr Kumah expressed regret that while the specified entities, especially the SOEs, held significant assets, their performance and effectiveness left much to be desired.
Background
The State Interest and Governance Authority (SIGA) has the mandate to oversee and administer the state’s interests in specified entities to ensure shareholder value, financial sustainability and good corporate governance.
Last week, the board of SIGA was inaugurated. The nine-member board is chaired by businessman, Mr Terrence Darko, and has the Director-General, Mr Edward Boateng, Ms Yasmin Baba and Mr Franklin Asafo-Adjaye as members.
The rest of the members are Mr Kow Essuman, Dr Margaret Atuahene, Mr Elikem Nutifafa Kuenyehia, and Mr David Collison.