Vice President Bawumia At The 2017 State-Owned Enterprises (SOE) Policy And Governance Forum

1. Hon. Ken Ofori Atta, Minister of Finance and Chairman for this forum
2. Hon. Ministers of State, Deputy Ministers of State, and Members of Parliament
3. Board Members,Chief Executives and Managing Directors of State-Owned Enterprises
4. Henry Kerali, Country Director of the World Bank
5. Members of the Press


6. Distinguished Ladies and Gentlemen


7. Your presence here todaydemonstrates our shared commitment to reforming State-Owned Enterprises (SOEs) to enable them deliver on the objectives for which they were set up
8. SOEs have been, and continue to be at the heart of the production and delivery of major public infrastructure and services: from electric power, through drinking water to petroleum products
9. Central to making Ghana the most business-friendly economy in Africais a private sector working hand-in-hand with an efficiently-run, capable public sector enterprises
10. As the quasi-commercial arm of the state, the role of SOEs in helping achieve the objective of job-creating Public Private Partnerships (PPPs) is pivotal as they extend to all critical sectors of the economy, including Energy & Power, Petroleum, Trade, Agriculture, Manufacturing, Housing, Railways and Aviation
11. The experience of other countries show that without a doubt, when efficiently managed, SOEs can be major catalysts for development, including, in the case of SOEs managing natural resources, mobilising capital for investments elsewhere in the economy. There is therefore an expectation that SOEs will be significant partners in Ghana’s economic development for the foreseeable future
12. This forum is coming at a time when, even as we celebrate entities that are doing relatively well, there is increasing pressure for SOEs to justify continued government support and investments, especially for loss-making and inefficientlyrun entities. It is my hope that you will take advantage of this forum to share with government not your many challenges – which we all know – but your strategies for ensuring financial discipline, exploring access to new sources of capital, transparency and accountability, and improving commercial viability
13. Over the next two days, my hope is that you will give attention tothreecritical issues: commercial viability, fiscal impact, and corporate governance issues

Commercial Viability

14. A recent report by the Ministry of Finance covering 18 SOEs indicates that they made a net loss of GH¢791 Million, in addition to having received loans and financial support totalling more than GH¢13 Million. This is no longer sustainable and it is your responsibility to come to the table, in the course of this forum, with solutions to it
15. The growth of the private sector makes it increasingly difficult to justify the participation of Government in certain sectors of the economy. Given that most SOEs were initially created to fill gaps in the economy at a time when there no private sector players with sufficient leverage to pursue such investments, it is increasingly making less sense for government to keep its interest in SOEs in sectors with strong private participation and which continue to make such losses
16. Government, on its part, will be exploring the possibility of listing as many SOEs as possible, where feasible, on the Ghana Stock Exchange as part of the overall drive to reform the sector and help them achieve commercial success

Fiscal Impact

17. An area which must also be of concern to us all is the impact of the quasi-fiscal activities of SOEs on the macroeconomic environment
18. A case in point is the energy-sector debt that has also created systemic risks in the banking sector. As managers of SOEs, the challenges we continue to have over these debts must be at the back of your minds when executing contracts and making commitments with financial, and ultimately fiscal implications for the whole economy
19. While the Public Financial Management Act provides for how financial and commercial transactions by state entities should be done, and prescribes sanctions for non-compliance, at the end of the day, it is the decisions you make on a day-to-day basis that will have positive and/or negative impact economy-wide and it is my expectation that this forum will address the PFMA as part of its deliberations

Corporate Governance

20. A major weakness of SOEs is its corporate governance structures. In addition to having leadership sufficiently invested with the requisite expertise, agile enough to keep up with, and get the best deals out of partnerships with the private sector, there is an urgent need to harmonise the way in which government manages these entities
21.  Currently, multiple institutions including the Ministry of Finance, the State Enterprises Commission (SEC) and sector Ministries perform various oversight functions in the SOE sector
22. This fragmentation in the Government’s ownership structure coupled with the absence of a clearly defined ownership framework has limited government’s ability to effectively oversee SOEs.
23. As part of the broad reforms, the State Enterprises Commission, as well as selected SOEs, are benefitting from a World Bank Technical Assistant Programme focused on consolidating the state’s ownership role in SOEs into a Single Entity, improving performance and ensuring effective and efficient service delivery by SOEs
24. The reforms also includes the development of key policies for the sectors within which the SOEs operate, including:
    
    
    • ownership policy
    
    
    • board nomination policy
    
    
    • financing policy
    
    
    • amendment of Acts establishing relevant SOEs to incorporate corporate governance sections; and
    • the listing of some SOEs on the Ghana Stock Exchange and conversion of others into Limited Liability Companies.

    
    


25. These actions are expected to significantly improve the governance of SOEs

Distinguished Ladies and Gentlemen

26. It is my hope that at the end of this forum, you will make proposals to government on the three principal issues I have raised – ensuring commercial viability of your entities, insulating the fiscal side of the economy  from your activities, and deploying truly world-standard corporate governance systems at your entities
27. SOEs will remain a major part of our economic transformation strategy going forward. It is in our interest that they do well so they can contribute positively to our efforts
28. I wish you well in your deliberations


29. God Bless You and God Bless Our Homeland Ghana