Skip Navigation

Manage State Owned Enterprises on public-private partnership basis – Economist

July 28, 2016, 3:40 p.m.

Economist and Senior Lecturer at the University of Ghana, Legon, Dr. Eric Osei Assibey has recommended that State Owned Enterprises (SOEs) such as the State Transport Corporation be privatized or managed on a public-private partnership basis.

According to him, privatisation would always come with efficiency while the issue of mismanagement will not be tolerated.

The predicament of SOEs is largely due to government’s inability to adequately fund their operations and do so profitably.

Companies such as the State Transport Corporation (STC), Electricity Company of Ghana (ECG), the Volta River Authority (VRA) are heavily indebted and need to be bailed out.

Dr Assibey was unhappy about the politicization of appointments into managerial positions in state enterprises, a development he blamed for the present predicament of the enterprises.

“Sometimes we play political games with our SOEs; instead of being more business oriented; we fail to engage people with the requisite qualification and competence too man the institutions,” he pointed out.

He advised government to encourage the private sector to enter into more partnerships with the public sector and help steer the affairs of the enterprises out of troubled waters.

The senior lecturer reckoned efforts by government to reduce its burden by empowering the enterprises to borrow against their own books and find the means of repaying the loans without recourse to government.

“We have seen that government is making frantic efforts to get the companies to borrow on their own balance sheets through the establishment of the escrow accounts.

Since government is itself highly constrained financially, it has been unable to bail out these firms which are struggling to survive,” he noted.

Meanwhile the State Enterprises Commission (SEC) will, from September 2016, undergo a major restructuring exercise aimed at revamping it to meet current challenges in the management of state-owned enterprises (SOEs).

The restructuring process is an initiative of the Ministry of Finance under the direct supervision and management of the Public Investment Division of the ministry and would be undertaken with support from the World Bank.

SOEs played a vital role in the development of the economy by way of employment creation and revenue generation.

However they also contributed to some of the challenges that confronted the national economy, for which reason measures had to be instituted to ensure efficiency on their part.