According to Fitch, an institution that analyses the creditworthiness of various countries around the world, eight largest State Owned Enterprises (SOEs) found in the utility, energy and transport sectors in Ghana, account for 90% of all revenue and virtually all SOEs losses.
In a report released in February 2006, Fitch disclosed that with the elimination of fuel subsidies however, SOEs may have made a small net contribution to the 2005 budget of perhaps 1% of Gross Domestic Product (GDP).
Despite an extensive privatization programme during the 1990s, the state still owns 35 enterprises outright and retains a majority interest in another 200.
“Their inclusion in a broader consolidation statement of the public finances would, however, add to the public debt burden, although data deficiencies make it hard to be precise,” the report said.
It criticized the government for its reluctance to relinquish complete control and its persistence to retain equity stakes in such operations as the Volta Aluminum Company (VALCO), most of which was sold to Alcoa, although the government has developed various strategies to improve the performance of SOEs.
“Likewise, it has taken 70% equity stake in Ghana International Airways, although the US$160 million of publicly guaranteed external debt of its predecessor remains unresolved.”
The report stated that the management of Ghana Telecom has returned to the public sector, following an unhappy outplacement arrangement with Telecom Malaysia.
“And the recent failure of two new private mobile phone operators raises questions about just how committed the authorities really are to the 'Golden Age of Business' and Ghana's aspirations to be seen as potential outsourcing site in Africa.”
Huge liabilities have been accrued by some State Owned Enterprises (SOEs) over the years and it has been thwarting the rapid pace of the country's divestiture programme under the authority of the Divestiture Implementation Committee (DIC) for some years.
Such liabilities, consisting of foreign loans, usually guaranteed by the government, severance awards, end of service benefits, outstanding salaries, contribution to Social Security and Insurance Trust (SNNIT) and others, have exceeded the evaluated price of the SOEs.
These have created legal problems for the DIC secretariat, the sole agency responsible for the divestiture of government shares in enterprises.
To regain investor-confidence in the SOEs, the government has started equipping them to make them viable.
Meanwhile in Fitch's sovereign ratings, which was conducted last year but released this month, Nigeria and Lesotho were rated BB- ahead of Ghana with B+ with positive outlook.