The Draining of Ghana Through State Enterprises

Since Nkrumah left, the formula has been to make noise about reform and then resort to privatization. From the SMC’s State Enterprises Commission to NADAA’S SIGA, the value has been the same. Under the guidance of the IMF/WB, privatization has been the only serious answer.

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I am an angry Ghanaian and you should be too. According to Dr. Ato Forson, the Finance Minister, “In 2018, only 2 state-owned enterprises, GPHA, and Ghana Re-insurance paid dividends. The number increased to 3 in 2019, with TDC joining but in 2024, the GPHA, which was amongst the most profitable SOEs also started making losses.”

Furthermore, according to the Finance Minister, ECG lost 5.96 billion Gh Cedis in 2023 while COCOBOD lost 3.8 billion in 2023 and 2024! In the news this week, we have been regaled with stories of ECG containers disappearing into thin air.

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Thanks to Newsfile, we just watched a detailed discussion of the ECG’s problems and it didn’t seem pretty at all. While the caution about jumping to conclusions is worth keeping in mind, it appears that the following facts exist:

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1: ECG was directed by the government to establish one account for receiving and paying funds from customers and stakeholders. It has over 30 accounts now.

2: Its BOD is unhappy with political interference.

3: It is unable to account for up to 30% of the power it receives.

4: It is failing to pay stakeholders like BUI Dam and Gridco, forcing them to take overdrafts to operate.

5: Between 2019 and 2023, the state paid $5.7 billion USD to keep it afloat. Now to return to GPHA, the idea that despite all that we see at Tema, it can have losses defy commonsense.

Remember the Anas investigation under President Mills? The idea that the organization that buys the beautiful cocoa our farmers produce can post losses is, Tafraky3, nonsense. Actually, many of our SOEs with loud-mouthed CEOs who win awards and brag actually post losses.

I want to suggest, my fellow Ghanaians, that they earn profits but these profits are sitting in private bank accounts or private pockets and properties.

Meanwhile, our political leaders do nothing except give fine speeches about reform. In 2020, NADAA said, “We will reform the governance of SOEs and maintain strong oversight over their performance. Targets will be set for the Board and Management of each of the enterprises and they will be monitored diligently. Good performance on the targets will attract rewards and poor performance will attract sanctions which will be applied and announced publicly. ”

Nothing happened, as usual. And despite making the right noises, President Mahama has gone ahead to name the next generation of party loyalists who will superintendent the looting of our SOEs. Given these facts, one can be forgiven for thinking that SOEs naturally lose money.

Meanwhile, China’s dominance of the global economy in the last 3 decades has been underpinned by SOEs! Chinese SOEs generate 25% of its GDP and 5% of the global GDP. 91 of the last Fortune Global 500 companies are SOEs. Amongst China’s most successful SOEs are Guodian, Huadian, China Power Investment Corporation, and other energy companies.

Here in Africa, Ethiopian Airlines has been soaring with the eagles and winning awards for a long time. Yet, when we had Ghana Airways, it had at a point, a Board of Directors, a CEO and one plane. And once, that plane waited at Heathrow Airport for 3 hours while a first lady, who didn’t even pay for her ticket finished her shopping.

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We have been at this false dichotomy between “to privatize or lose money” since Nkrumah left us with a bunch of SOEs. In 1988, there were 350 of them. The PNDC privatizations had, by 1994, affected 132 with a net worth of $488 million, according to the World Bank.

It had by then, led to the loss of 40,000 jobs. And yet, the 316 million USD realized from the partial divestment of AGC was used to cover the budget. That violated intergenerational equity by not investing for the benefit of future generations. To compound the injury, most of these priced assets went to government cronies at donkomi prices.

Since Nkrumah left, the formula has been to make noise about reform and then resort to privatization. From the SMC’s State Enterprises Commission to NADAA’S SIGA, the value has been the same. Under the guidance of the IMF/WB, privatization has been the only serious answer.

In truth, it seems the IMF/WB has never met an SOE, it did not want to privatize. And while SOEs exist, our 2 major parties in the 4th Republic have come to see them as the place where party stalwarts who help to win elections are sent to extract their just rewards– as CEOs and Board members.

These appointments, more often than not, are about loyalty to the party and President rather than competence. As one party hack told the other after an election during a discussion about an SOE, “Menua, eho di3, sika nni ho oo”. In a seminal paper in Harvard Business Review, Regina Herzlinger and others discussed SOEs and non-profits and suggested a scheme that might be helpful. Our SOEs are ineffective– they don’t accomplish their basic goals–eg Ambulance Services that permits poor patients to die because of fuel.

They are inefficient– Universities producing unemployed graduates and ECG with Dumsor. There is too much emphasis on benefits for appointees and BOD members to the detriment of the public’s interest. They take excessive risks like the Bank of Ghana spending excessively for a new Headquarters.

And they don’t practice intergenerational equity– as in the Forestry Commission permitting Galamsey in our forest reserves that will destroy our environment. What are the solutions? First, let us emulate the Chinese and Ethiopian Airlines who emphasize meritocracy and professionalism. Deng said the guiding principle should be, ” respecting knowledge and talented people.”

A Senior member of the Kufuor government once told me that “at least half of those on Boards of SOEs are not qualified to be on them.

Second, there must be transparency. There must be sunlight in the criteria for selection of management and BOD. And no MP must serve on a public board whose business might come before Parliament. Third, there must be rigor in the analysis of performance by the government, Parliament and the media. Finally, there must be sanctions for poor performance and losses.

Discussing the progress of China, Deng said,” You have to use a two-fisted approach; with one hand you grab reform and opening, with the other, you grab every form of criminal behavior. You have to have a firm grip with both hands.”

Accountability is indispensable to making our SOEs deliver for Ghana. In “The Forgotten Continent “by Michael Reid, page 214, on Lava Jato, regarding Brazil’s Petrobas, it is stated, “In all, by January 2017, 260 people had been charged and 25 sentenced in lower courts as a result of Lava Jato investigation, 68 faced accusations in the Supreme Court.

At that point, 13 Senators and 22 congressmen were under investigation. Prosecutors found evidence of bribes totaling $2 billion USD.” That is real accountability. Let’s move Ghana forward.

Source: norvanreports.com

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