SOEs Must Wake Up - Finance Minister

The Minister of Finance and Economic Planning, Dr Kwabena Duffuor, has charged the management of state-owned enterprises (SOEs) to devise innovative strategies to enable them to contribute their quota to the Consolidated Fund through the regular payment of dividend to the government. He bemoaned the fact that while the government had programmed to receive GH¢15 million from investments in both joint venture companies and SOEs for this year, only GH¢5.2 million of the amount had so far been received. Dr Duffuor was speaking at the signing of performance contracts between the government, on one hand, and board chairmen and chief executives of 32 SOEs, on the other, in Accra yesterday. The ceremony was also witnessed by sector ministers and deputy ministers. The Finance Minister singled out the Graphic Communications Group Limited (GCGL) as the only SOE to have paid dividend this year and commended the board and the management of the GCGL for their exemplary perfomance and leadership. He noted that the State had entrusted huge amounts of investment into the care of boards and management of SOEs and expected adequate returns on that investment, explaining that if all the SOEs were performing creditably, the government would not look for external assistance for the budget. Dr Duffuor gave the assurance that the government’s prudent macroeconomic policies were beginning to bear fruits, as inflation and the depreciation of the cedi had been minimised. He said the fact that some SOEs were set up to provide social services and deliver quality services to the people did not absolve them from the responsibility of using resources judiciously and maintaining financial sustainability. The Finance Minister, therefore, called on enterprises such as the Ghana Water Company, the Electricity Company and others providing such important services to take up the challenge to deliver efficient and quality services. He said records of the past four years revealed that out of the 28 SOEs which signed performance contracts, only three paid dividends annually. He said those enterprises were the GCGL, the Precious Minerals Marketing Company and the Ghana Supply Company Limited. Dr Duffuor said some SOEs were in very weak financial positions, saying that the government would examine each case on its own merit for the provision of the needed resources to enable them to deliver on their mandate. He said the government was aware of the numerous challenges that confronted a number of SOEs, including obsolete equipment, liquidity problems, as well as access to credit. He urged the State Enterprises Commission (SEC) to set up a comprehensive database of all SOEs so that quarterly consolidated reports could be prepared and submitted to the Ministry of Finance and Economic Planning for the purposes of monitoring and evaluating performance. He assured the SEC that his ministry would provide the necessary support to enable it to closely monitor the performance contracts signed by the SOEs. The Finance Minister said since SOEs were potential sources of fiscal risk, it was important that the government systematically and frequently monitored their operations and reported to the public with enough evidence that the risks were properly evaluated and mitigated. The acting Executive Chairman of the SEC, Mr Yaw Klinogo, urged the management of SOEs to pay particular attention to six key areas in their operations. These, he said, were leadership and direction, culture and behaviour, systems, processes, people and governance. He also entreated the management of SOEs to ensure the timely submission of their audited annual reports to enable the SEC to enhance its monitoring role. Mr Klinogo was of the view that if the management of SOEs were able to instil discipline in their operations, work culture would improve and impact positively on the operations of organisations.