Concerns over the performance and management of Ghana’s State-Owned Enterprises (SOEs) have once again come to the forefront, following strong warnings from government officials that underperforming entities may soon face sweeping reforms, mergers, privatisation, or outright closure.
At the center of the renewed debate is the insistence that loss-making public institutions can no longer justify paying bonuses while struggling financially. The message, delivered by Thomas Ampem Nyarko, signals a shift toward stricter fiscal discipline and accountability in the management of public enterprises.
Speaking during an engagement with the State Interests and Governance Authority (SIGA), the Deputy Finance Minister did not mince words. He questioned the logic of awarding incentives in institutions that are failing to generate profits or even break even.
“It doesn’t make sense that you make losses and pay bonuses… Bonus comes out of profits or surplus,” he stated.
His remarks have since sparked a broader national conversation about governance, efficiency, and the future of SOEs in Ghana.
A Longstanding Problem Resurfaces
State-Owned Enterprises have historically played a critical role in Ghana’s economy. They operate in key sectors such as energy, transportation, agriculture, and finance, providing essential services while also contributing to national development.
However, many of these entities have struggled with persistent losses, inefficiencies, and governance challenges. Over the years, successive governments have attempted various reforms, but the issues have remained largely unresolved.
The latest intervention suggests that authorities are now prepared to take more decisive action.
Officials warn that the era of tolerating underperformance may be coming to an end. Loss-making SOEs could face restructuring measures, including:
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Mergers with more viable entities
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Partial or full privatisation
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Leadership changes
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Or, in extreme cases, shutdown
These measures, while necessary from a fiscal standpoint, are likely to generate debate, particularly around job security and public service delivery.
The Bonus Controversy
One of the most contentious issues raised is the payment of bonuses in loss-making institutions.
Critics argue that such practices not only strain public finances but also undermine morale and accountability. When organizations that rely on government support continue to reward executives and staff despite poor performance, it raises questions about oversight and governance.
The position taken by Thomas Ampem Nyarko reflects a growing consensus that incentives must be aligned with results.
Economic analysts note that bonuses are traditionally tied to profitability or surplus. In the absence of these, awarding bonuses can be seen as a misuse of limited resources—especially in a country where public funds are under pressure.
Expert Insights from Academia and Policy Circles
The issue was further examined on Super Morning Show on Joy FM, where leading experts shared their perspectives on the challenges facing SOEs.
Among them was Peter Quartey, a Professor of Economics and former Director of the Institute of Statistical Social and Economic Research.
Professor Quartey pointed to structural and governance issues as the root causes of inefficiencies in many SOEs. He emphasized that leadership selection processes must be transparent and merit-based.
“How are CEOs appointed? Are they competitively selected, or are they appointed along political lines? If this were a private business, would you appoint such a person?” he questioned.
His remarks highlight a critical concern: the perception that political considerations often influence appointments in public enterprises, potentially at the expense of competence and performance.
Leadership and Accountability Under Scrutiny
According to Professor Quartey, the effectiveness of SOEs depends heavily on the quality of their leadership. Without capable and accountable executives, even well-resourced institutions can underperform.
He called for the introduction and strict enforcement of Key Performance Indicators (KPIs) for chief executives, similar to the assessments already conducted for boards.
“CEOs should be given KPIs and assessed annually. Boards are assessed, so the same should apply to chief executives,” he noted.
This approach, he argued, would create a culture of accountability and ensure that leaders are held responsible for the outcomes of their decisions.
Performance-based management systems are widely used in the private sector and have been shown to improve efficiency and productivity. Extending such practices to SOEs could help bridge the gap between public and private sector performance standards.
The Role of SIGA in Driving Reform
The State Interests and Governance Authority plays a central role in overseeing SOEs and ensuring that they operate in line with national objectives.
Under its mandate, SIGA is responsible for monitoring performance, enforcing governance standards, and advising government on policy decisions related to state enterprises.
The Authority has increasingly emphasized the need for reforms, particularly in areas such as:
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Financial discipline
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Corporate governance
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Transparency and reporting
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Strategic alignment with national development goals
The involvement of Kpessah-Whyte in the recent discussions underscores the urgency of the situation.
Balancing Economic and Social Objectives
One of the complexities in managing SOEs is their dual role. Unlike private companies, which are primarily profit-driven, state enterprises often have social responsibilities.
They may be required to:
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Provide affordable services
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Operate in underserved areas
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Support government policies
These obligations can sometimes make profitability challenging.
Professor Quartey acknowledged this reality but insisted that social objectives should not be an excuse for inefficiency.
He argued that even when SOEs are not profit-oriented, they should still strive for operational efficiency and cost-effectiveness. Clear targets and accountability mechanisms can help ensure that resources are used wisely.
The Case for Privatisation and Mergers
The government’s openness to privatisation and mergers reflects a pragmatic approach to addressing the challenges facing SOEs.
Privatisation, in particular, has been a topic of debate for decades. Proponents argue that transferring ownership to the private sector can:
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Improve efficiency
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Attract investment
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Reduce the financial burden on government
Critics, however, warn that it could lead to job losses and reduced access to essential services, especially for low-income populations.
Mergers, on the other hand, offer a middle ground. By combining resources and operations, struggling entities can achieve economies of scale and improve performance.
The success of such measures will depend on careful planning, stakeholder engagement, and effective implementation.
Public Expectations and Trust
The renewed focus on SOE reform comes at a time when public expectations for accountability are high.
Citizens are increasingly demanding transparency in how public funds are managed. The perception that some SOEs operate inefficiently while still rewarding executives has contributed to skepticism and frustration.
Addressing these concerns will require not only policy changes but also a commitment to openness and communication.
Regular reporting, independent audits, and public disclosures can help rebuild trust and demonstrate that reforms are delivering results.
Broader Economic Implications
The performance of SOEs has significant implications for Ghana’s overall economy.
Loss-making enterprises can place a strain on public finances, diverting resources that could be used for other priorities such as education, healthcare, and infrastructure.
Improving the efficiency of SOEs could:
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Reduce fiscal deficits
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Enhance service delivery
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Support economic growth
Conversely, failure to address these issues could exacerbate existing challenges and limit the country’s development prospects.
Lessons from Global Experiences
Ghana is not alone in facing challenges with state-owned enterprises. Many countries have undertaken reforms to improve the performance of their public sector institutions.
Common strategies include:
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Strengthening corporate governance
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Introducing performance-based management
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Enhancing transparency
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Encouraging private sector participation
Countries that have successfully implemented such reforms have often seen improvements in efficiency and financial performance.
These experiences offer valuable lessons that Ghana can adapt to its own context.
The Way Forward
As discussions continue, there is a growing consensus on the need for a comprehensive and sustained approach to SOE reform.
Key priorities include:
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Ensuring merit-based appointments
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Enforcing performance standards
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Aligning incentives with results
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Strengthening oversight mechanisms
Collaboration between government, regulatory bodies, and stakeholders will be essential in driving these changes.
Conclusion
The renewed focus on the performance and management of State-Owned Enterprises marks a critical moment for Ghana’s economic policy.
With strong statements from leaders like Thomas Ampem Nyarko and insights from experts such as Peter Quartey, the message is clear: the status quo is no longer acceptable.
As the State Interests and Governance Authority intensifies its oversight and the government considers bold reforms, the coming months will be crucial in determining the future of SOEs in Ghana.
Whether through restructuring, improved governance, or strategic partnerships, the goal remains the same—to create efficient, accountable, and sustainable institutions that contribute meaningfully to national development.
For many observers, the real test will not be in the announcements, but in the implementation. The success of these reforms will ultimately depend on the willingness to follow through and make difficult but necessary decisions.
