Ghana’s State Interests and Governance Authority (SIGA) has revealed a complex and concerning financial picture of the nation’s state-owned enterprises (SOEs) in its 2024 State Ownership Report.
The data shows a paradox: while the sector generated impressive revenue growth, these gains were wiped out by deepening net losses, driven largely by high finance costs.
The report, covering 152 specified entities, highlights both progress and persistent challenges, indicating that while operational efficiency is improving, deep-seated issues around debt and financial discipline continue to plague Ghana’s public sector.
In 2024, the SOE sector recorded a significant 28.3% increase in total revenue, rising to GHS133.68 billion.
This growth was fueled by strong performances in key sub-sectors, including energy and financial services.
The report also noted a recovery in operational efficiency, with Profit Before Interest and Tax (PBIT) climbing to GHS1.57 billion, a notable turnaround from the previous year.
However, this operational success was completely neutralized by a staggering GHS9.39 billion in finance costs.
As a result, the sector ended the year with a widened net loss of GHS9.67 billion, compared to GHS7.14 billion in 2023.
The report highlights that for every GHS1 in operating profit generated, an additional GHS4.97 was required to service finance costs, illustrating the severity of the debt burden.
The report identifies the Electricity Company of Ghana (ECG) and Ghana Water Company Limited (GWCL) as major contributors to this debt crisis.
ECG, VRA, and GNPC were responsible for significant increases in total assets but also drove a corresponding surge in liabilities, with ECG alone accounting for GHS71 billion in liabilities. This mounting debt poses a substantial fiscal risk to the government and threatens the stability of essential services.
Beyond the energy and water sectors, five SOEs, including Ghana Cylinder Manufacturing Co. Ltd and Tema Oil Refinery, have consistently reported losses from 2020 to 2024, creating long-term financial vulnerabilities.
Addressing senior editors from key media houses in Accra, the Acting Director-General of SIGA, Professor Michael Kpessa-Whyte, confirmed that the findings of the report will inform meaningful dialogue and drive necessary reforms.
He emphasized that the Ghanaian people expect these public entities to deliver an attractive value proposition as their collective shareholders.
The 2024 SOR covers 152 out of 175 approved Ses, an increase of five entities from the previous year, demonstrating expanded oversight. These include 54 SOEs, 30 JVCs, and 68 OSEs.
Improvement in financial reporting: A total of 73 financial statements used in the report underwent external audit processes (53 audited, 20 audit drafts), a marginal improvement from 62 in the previous edition.
However, 79 (51.97%) were still submitted as management accounts.
The average performance index for the 70 SEs evaluated under performance contracts was 3.152 (on a 5-point scale), representing a 6.78% improvement over FY2023. This suggests growing awareness of efficiency among participating SEs.
The improvement was largely driven by gains in dynamic effects, projects, and efficiency/productivity dimensions, though financial and corporate governance dimensions saw a decline.
Revenue Growth: The SOE sector recorded total revenue growth of 28.30%, reaching GHS133.68 billion in FY2024 from GHS104.19 billion in FY2023.
Key drivers included the Energy (38.98% growth) and Financial & Allied Services (49.52% growth) sub-sectors.
The sector demonstrated steady gains in operational efficiency over three fiscal years, with PBIT recovering to GHS1.57 billion in FY2024 from GHS376.93 million in FY2023 (FY2022: –GHS9.62 billion).
Deepened Net Loss Due to Finance Costs: Despite operational gains, the sector closed FY2024 with a deeper net loss of GHS9.67 billion, compared to –GHS7.14 billion in FY2023.
This was primarily due to excessive finance costs of GHS9.39 billion, which eroded all operational profits.
Total SOE assets grew by 22.52% to GHS395.20 billion in FY2024, with ECG, VRA, and GNPC being the top contributors.
Total liabilities also surged by 24.20% to GHS281.94 billion, with ECG alone accounting for GHS71.00 billion.
Five SOEs, Ghana Cylinder Manufacturing Co. Ltd, GNPA Ltd, Ghana Water Company Ltd, Graphic Communications Group Company, and Tema Oil Refinery, consistently reported losses from FY2020–FY2024, posing significant fiscal risks to the government.
Mounting debts of ECG and Ghana Water Limited (GWL), as well as COCOBOD’s ongoing challenges, continue to undermine overall progress.
Consistent Profit Makers: Nine SOEs, including GPHA, Bui Power Authority (BPA), Ghana National Gas Company (GNGC), and Bulk Energy Storage & Transportation Company (BOST), demonstrated uninterrupted profitability over the five-year period.
Dividends: Three SOEs, Ghana Reinsurance Company Ltd, TDC Company Ltd, and State Housing Company Ltd (for the first time in three decades), paid dividends totaling GHS29.36 million to the government in FY2024, a 78.88% increase from FY2023.
The JVC sector (excluding minority interest) witnessed a strong recovery, moving from a loss of GHS1.33 billion in FY2023 to record GHS1.51 billion in net profits in FY2024, a 213.77% increase.
Asset Growth: Total JVC assets grew by 39.86% to GHS71.89 billion in FY2024.
Minority Interest JVCs: These entities also surpassed previous performance, recording a massive net profit of GHS24.88 billion in FY2024, up from GHS1.64 billion in FY2023.
Dividend Contributions: Minority-interest companies were the largest contributors to total dividends, paying GHS1.03 billion in FY2024, representing 91% of total dividend receipts.
Reduced Net Deficit: OSEs reported a net deficit of GHS2.40 billion in FY2024, a 68.86% reduction from –GHS7.72 billion in FY2023.
Asset and Liability Increase: Total OSE assets increased by 60.15% to GHS310.62 billion, while total liabilities rose by 41.83% to GHS323.17 billion.
Negative Accumulated Fund: The OSE sector still recorded a negative accumulated fund of –GHS12.54 billion, primarily driven by the Bank of Ghana’s negative equity of GHS58.62 billion.
Ghana’s economy recorded stronger-than-expected GDP growth of 5.7% in FY2024, inflation marginally elevated to 23.8%, and the cedi stabilized. Capital markets rebounded, with the GSE Composite Index increasing by 56.2%.
Despite these gains, fiscal performance deteriorated, with the overall deficit widening to 7.9% of GDP, driven by high interest costs and expenditure pressures.
Public debt rose to GHS726.70 billion, though it improved relative to GDP (61.8%) due to debt restructuring efforts, including the completion of Eurobond restructuring in FY2024.
Government commitments, including outstanding loan guarantees of GHS3.15 billion and on-lent loans of GHS14.73 billion, pose significant fiscal risks. Payments for contingent liabilities arising from PPP agreements amounted to US$100.1 million in FY2024.
State Ownership Policy and Code of Corporate Governance for Specified Entities: In 2024, two key policy instruments, the State Ownership Policy and the Code of Corporate Governance were launched to institutionalize good governance across public organizations.
Ghana Shippers’ Authority Act, 2024 (Act 1122): This new legislation strengthens GSA’s regulatory mandate and introduces transparency in port fees, aiming to position Ghana as a regional transit trade hub.
ESLA Plc wound up its bond programme in 2024, transferring GHS3.03 billion in unutilized funds to the Ministry of Finance.
Ghana National Gas Company acquired Ghana Cylinder Manufacturing Company, a strategic move to enhance efficiency and production.
The Ghana Stock Exchange (GSE) surpassed the GHS400 billion mark in market value, indicating renewed investor confidence.
Commissioning of the GOIL–SMB Bitumen Processing Terminal (US$40 million).
Ghana Nuclear Power Initiative: Nuclear Power Ghana signed an agreement to deploy NuScale’s VOYGR-12 Small Modular Reactor (SMR) technology by 2030.
Launch of the Jomoro Petroleum Hub Development, projected to cost US$12 billion and create 780,000 jobs by 2036.
The government approved the sale of assets of 17 defunct entities, with two already disposed of.
Reporting on CSIIs declined by 18% in FY2024, with only 27 SOEs reporting activities, down from 33 in FY2023, highlighting the need for continued capacity building and clearer reporting indicators.
Of the 44 reported CSIIs, 82% were mitigation-oriented (reducing GHG emissions), while 18% focused on adaptation (building resilience to climate impacts).
SEs face significant physical, transition, and liability risks related to climate change, though specific cost information for physical risks was not provided.
The total SE workforce stood at 99,091 in FY2024, with 70.33% male and 29.67% female, a marginal increase in female representation from 28.53% in FY2023.
Female representation in executive management (28.23%) and board membership (25.87%) remains below the 30% threshold required by the Affirmative Action (Gender Equity) Act, 2024 (Act 1121). OSEs, however, are slightly above the threshold for executive management.
Youth representation (under 25 years) remains very low (2.61%) across all SEs. JVCs have a relatively older workforce, indicating potential succession challenges.
Only 27.91% of SEs reported having a gender policy, and 33.33% have a code of ethics.
The Minister for Finance, Hon. Cassiel Ato Forson, acknowledged the operational weaknesses and debt burden of the SOE sector but emphasised the government’s commitment to an economic reset agenda.
“The task ahead is immensely difficult, given the dismal nature of the 2024 performance.
It is unequivocally the case that the expectations of the Ghanaian people are that SOEs must deliver and offer an attractive value proposition to Ghanaians as their shareholders.”
He further urged SIGA to enforce strict adherence to financial reporting timelines and penalize non-compliant SOEs.
The report underscores the imperative for sustained fiscal discipline, debt management, enhanced domestic revenue mobilisation, and structural reforms under the IMF-supported Post COVID-19 Programme for Economic Growth (PC-PEG).
A deep-dive diagnostic study into poorly performing SOEs, part of the Public Financial Management for Service Delivery (PFM4SD) programme cannot be delayed, as it aims to uncover root causes of financial challenges and drive profitability.
Prioritising dividend payments as a central objective is also crucial to signal financial health and foster accountability.
SIGA remains committed to its transformative agenda, collaborating with the Ministry of Finance to champion fiscal responsibility, financial transparency, and performance accountability within the SE landscape.
Source: Myxyzonline.com/Ama Pomaa Kyekyeku
