The State Interests and Governance Authority (SIGA) delivered a stark assessment of the financial performance of State-Owned Enterprises (SOEs) in Ghana for 2024, revealing substantial losses and raising serious concerns about their operational efficiency and overall contribution to the national economy. The somber report, presented during a presidential meeting, highlighted a significant negative profit after tax of GH¢8.54 billion, a dramatic worsening from the previous year’s loss of GH¢1.36 billion. This substantial deficit underscores fundamental challenges within the SOE sector, indicating potential mismanagement, operational inefficiencies, or external economic pressures impacting their profitability.
Delving deeper into the financial metrics, the report painted a bleak picture of the SOEs’ ability to generate returns on their investments. Both the Return on Assets (ROA) and Return on Equity (ROE) were negative, standing at -2.5% and -8.1% respectively. These figures demonstrate that the SOEs are not only failing to generate profits but are also eroding the value of their assets and equity. This raises critical questions about the effectiveness of their current business models, strategies, and leadership in managing resources and generating sustainable returns. The negative ROA and ROE suggest the urgent need for structural reforms, improved operational efficiency, and strategic investments to turn the tide and ensure the long-term viability of these enterprises.
Despite controlling a substantial asset base of GH¢338.15 billion and contributing a significant 23% to Ghana’s nominal GDP, the SOEs are struggling to translate their size and market share into profitability. This paradox highlights a critical disconnect between their potential and actual performance. While their contribution to the national economy is undeniable, the consistent losses raise concerns about their long-term sustainability and their ability to contribute effectively to national development. The substantial asset base also raises questions about asset utilization and whether these assets are being deployed optimally to generate returns and contribute to the overall economic growth.
The report also revealed that the SOEs generated total revenue of GH¢103.79 billion, but their total operating expenses amounted to GH¢105.54 billion. This resulted in a cost recovery ratio of 0.99, indicating that operating costs are barely being covered by revenue. This precarious financial position signifies a need for stringent cost control measures and a reassessment of operational strategies to improve efficiency and reduce unnecessary expenditures. The near-unity cost recovery ratio suggests that even minor fluctuations in revenue or expenses could push the SOEs further into financial distress, highlighting the urgency for corrective actions.
Furthermore, the report shed light on the gender distribution within the SOE workforce, revealing a significant disparity. With 76.03% of employees being male and only 23.97% female, the data underscores the need for greater gender balance and inclusivity within these organizations. While the report doesn’t delve into the reasons behind this disparity, it highlights the importance of promoting gender equality and creating opportunities for women in leadership and technical roles within the SOE sector. This imbalance could indicate potential systemic biases in hiring and promotion practices that need to be addressed to ensure a more diverse and representative workforce.
Finally, the report disclosed that the total liabilities of the SOEs amounted to a staggering GH¢232.69 billion. This significant debt burden further complicates their financial situation and raises concerns about their long-term solvency. The high level of liabilities restricts their financial flexibility and limits their ability to invest in growth and development. This substantial debt burden necessitates a comprehensive debt management strategy to mitigate risks and ensure the long-term sustainability of the SOE sector. Addressing the underlying causes of the losses and improving operational efficiency will be crucial to reducing the debt burden and ensuring the long-term financial health of these enterprises. Overall, the SIGA report presents a concerning picture of the financial health of Ghana’s SOEs, requiring immediate and comprehensive action to address the identified challenges and ensure their contribution to the national economy.
