A recent report from the State Interests and Governance Authority (SIGA) has revealed a massive increase in expenditure by most State Owned Enterprises (SOEs).

The report highlights the performances of 54 State Owned Entities categorised under seven broad sub-sectors, such as Energy, Transport & Logistics, Financial & Allied Services, Manufacturing, Infrastructure, Communication, and Agriculture.

In its 2024 report, the Authority highlighted that SOEs' expenditure saw a sharp rise from GH₵103.8 million in 2023 to GH₵132.1 million in 2024, marking a 27% increase. This means their expenditure went up by GHS 28.3 million within that period.

According to SIGA, seventy-two percent (72%) of the expenditure was spent on direct costs like fuel, raw materials and other services.

“Of the total GH₵132.1 million expenditure recorded in 2024, approximately 72% was attributed to direct operational costs, including fuel, raw materials, and essential services required for production and service delivery”, the report highlighted.

SIGA attributed the spike partly to the volatility of the cedi, which depreciated by 27.8 percent against major foreign currencies, impacting costs and revenues of entities exposed to foreign transactions.

It also listed the energy sector as one of the primary contributors to the hike in costs, with an expenditure of Gh₵87.0 million in operating costs, i.e., a 32.5% rise from 2023.

“The Electricity Company of Ghana (ECG) and Ghana National Petroleum Corporation (GNPC) dominated the spending, contributing GH₵43.2 million and GH₵18.7 million respectively,” parts of the statement mentioned.

On the other hand, Tema Oil Refinery (TOR) spent the least, with only GH₵1.75 million in expenses. Also, spending in the Agric sector saw a rise. But this, SIGA said, was due to the Ghana Cocoa Board (COCOBOD) having to pay farmers much more for cocoa, even though less cocoa was produced.

“Agriculture revenues fell 21.3 per cent to GH₵16.5 billion, largely due to a 28.2 per cent slump in cocoa output, which hit COCOBOD’s earnings. Despite the revenue dip, expenses in the sub-sector surged to GH₵18.7 billion, reflecting higher cocoa producer prices, which rose from GH₵12,800 per tonne in 2022/23 to GH₵33,120 in 2023/24. This represents a 158.8 percent increase.

Finance-related state bodies also spent a lot more, especially on contractors, social benefits, and services. Key cost drivers included the Ghana Road Fund (Gh₵5.4 million paid to contractors), GETFund (Gh₵3.6 million in social benefits), and Ghana Reinsurance (Gh₵1.1 million in service expenses).

“The financial and allied sub-sector saw one of the steepest increases, with expenditure climbing 44.1 percent in 2024 after contracting slightly in 2023,” SIGA added.

Over the years, SOEs have been long viewed as inefficient, bureaucratic, and prone to financial mismanagement. The massive net losses reported annually by these state enterprises subject them to massive scrutiny and public backlash. A case in point is the GH ₵14 billion losses recorded in 2022, which fueled public doubt about their value and sustainability.

When the current president assumed power, several SOEs were wallowing in debt, with some operating with a bank balance of as low as GH₵25.08 at the Bank of Ghana (BoG).

This was announced by Minister for Communications, Digital Technology, and Innovations, Sam George, when he made headlines following the revelation on the National Information Technology Agency (NITA), which operates under SIGA’s oversight.

Consequently, President John Dramani Mahama issued a stern warning to Chief Executive Officers (CEOs) of State-Owned Enterprises (SOEs), making it clear that underperformers will not be spared as his government pushes for a complete overhaul of the sector.

Addressing CEOs of specified entities under the State Interests and Governance Authority (SIGA) on Thursday, March 13, President Mahama emphasised that SOEs must operate efficiently and contribute meaningfully to the national economy. He warned that any enterprise failing to align with his administration’s reset agenda would face tough decisions, including mergers, privatisation, or closure.

“I will assess you based on your performance. If you do not align with the pace of the reset agenda, you may be asked to step aside. If that adds to the horror movie, so be it,” he declared.

He stressed that the days of financial mismanagement, unaccountability, and inefficiency in SOEs were over. “The era of impunity, mediocrity, and financial recklessness must end today,” he asserted.

President Mahama’s remarks follow Finance Minister Dr. Cassiel Ato Forson’s revelation that several SOEs remain financially weak and continue to be a drain on the economy. Dr. Forson expressed deep concern over their ongoing losses, noting that their underperformance does not reflect their true potential.

“Unfortunately, some of them are posing a significant fiscal risk to the economy of Ghana. The two most threatening, worrisome are the ECG, COCOBOD. We must implement a bold turnaround strategy that transforms loss-making SOEs into financially viable and self-sustaining institutions,” he stated.

The Finance Minister outlined three key strategies aimed at improving SOE performance: capacity building to strengthen leadership and ensure effective management, enhanced corporate governance training to enforce regulatory compliance, financial discipline, and strategic decision-making to restore profitability.

He urged the CEOs to fully embrace the government's vision of reforming SOEs into productive entities that contribute to national development.

“I want to end by urging all stakeholders, State-Owned Enterprises, and heads of state institutions to buy into your vision. A vision to restore hope, a vision to work in transparency and the determination that you have always led us – a determination to the people of the Republic of Ghana,” Dr. Forson said.

With these directives, the Mahama administration has signalled its commitment to driving efficiency and accountability in the management of state enterprises, ensuring that only those who meet performance expectations retain their positions.