‘SOEs pose economic threat on account of poor performance’

Ghana’s Finance Minister, Dr Cassiel Ato Forson, has raised alarm over the growing financial risks that threaten to cripple the economy, primarily due to the poor performance of State-Owned Enterprises (SOEs) and joint venture companies. 

Speaking at the National Economic Dialogue held at the Accra International Conference Centre on the theme “Resetting Ghana, building the economy we want” Dr Forson emphasized that many SOEs are operating at a loss and their financial difficulties pose a significant challenge to the country's overall economic stability.

Dr Forson painted a grim picture of the current state of SOEs, revealing that nearly all of them are operating at a loss. He singled out key organisations such as the Electricity Company of Ghana (ECG) and the Agricultural Development Bank (ADB) as examples of entities struggling financially. 

According to the Finance Minister, this situation not only weakens the financial standing of these enterprises but also poses a broader risk to the country's economy.

“State-owned enterprises (SOEs) and joint venture companies are facing significant operational and financial risks. Nearly all SOEs are operating at a loss, with organisations such as the ECG and the ADB among those in the red,” he said. 

Dr Forson disclosed that without urgent intervention, the cumulative financial burden of these underperforming SOEs could push the country into a precarious economic position.

He pointed out that SOEs have long played a central role in the Ghanaian economy, contributing to public services and the country's development. 

However, the Finance Minister warned that the current unsustainable operations of these enterprises could lead to deeper fiscal challenges, affecting not only government revenue but also the livelihoods of citizens dependent on their services.

COCOBOD’s artificial profit

The Finance Minister also delved into the financial health of the Ghana Cocoa Board (COCOBOD), which, despite reporting a profit of GHc 2.2 billion in 2023, faces significant challenges. 

Dr Forson labelled the reported profit as “artificial,” explaining that it arose from the debt suspension granted to COCOBOD, which allowed the organisation to temporarily avoid servicing its debt obligations.

“Starting from 2021 through to 2023, COCOBOD reported a profit of GHc 2.2 billion in 2023. However, this profit is artificial. It arose because they were unable to service their debt due to the debt suspension. The debt remains and as a result, we will need to take steps to restructure many of the state-owned enterprises (SOEs),” he said. 

Dr Forson’s statement underscores the need for structural reforms to address the underlying financial challenges faced by COCOBOD and other SOEs.

The Finance Minister further highlighted that while COCOBOD’s short-term profit appears positive, it masks the ongoing financial difficulties that threaten the long-term sustainability of the organisation. 

The suspension of debt payments was a temporary relief and without proper restructuring, COCOBOD may find it difficult to continue its operations effectively in the future.

Reforming and restructuring

In his closing remarks, Dr Forson emphasized the importance of the National Economic Dialogue as a platform to reflect on the country’s economic challenges and find solutions to prevent the recurrence of past mistakes. 

He acknowledged that the path forward would not be easy, but stressed that restructuring SOEs was necessary to secure the long-term health of the economy.

“This dialogue presents a chance to reflect on our economic situation, tackle the challenges we face and set a path toward a more prosperous future for our citizens. 

My hope and prayer are that the insights gained from these discussions will guide our actions and help us avoid repeating the mistakes of the recent past,” he said.