JVCs post 8,790% decline in net profit for 2020 – Finance Ministry
State-owned Joint Venture Capital (JVCs) recorded a significant decline in net profit for the 2020 fiscal year.
Per the 2020 State Ownership Report by the Ministry of Finance, net profit of JVCs declined to GHS 11.81m in 2020 from the GHS 1.05bn net profit recorded in 2019.
The recorded decline represents some 8,790 percent drop in net profit for the year under review.
According to the Finance Ministry, the devastating impact of the Covid pandemic tended to disproportionately affect JVCs and severely hampered their revenue-generating ability.
Adding that government had to provide payroll support to JVCs amid the pandemic.
Meanwhile, aggregate revenue outturn from State-Owned Enterprises (SOEs) to government for the 2020 review period amounted to GHS 45.23bn.
Per the 2020 State Ownership Report by the Ministry of Finance, the GHS 45.23bn revenue recorded by SOEs for 2020, marks a revenue increment of 20 percentage points when compared to the 2019’s revenue performance of GHS 37.91bn.
In terms revenue losses, SOEs recorded some GHS 2.61bn losses in the year under review.
The recorded loses for 2020 represents a 49.2 percent improvement on the 2019 aggregate net loss of GHS 5.16bn.
Government’s Minority Interests in mining firms resulted in an aggregate net profit of GHS 11.25 billion in 2020 as against a net loss of GHS 62.17 million for 2019.
Touching on the adverse impact of the Covid pandemic on State Enterprises, the Finance Ministry in the report noted that decisive and bold measures were taken to support businesses in both the private and public sector with government providing payroll support of GHS 127.5 million for the worst affected SOEs, JVCs and tertiary institutions whose operations were severely impacted by the closure of our borders and the imposition of movement restrictions.
Adding that, given the impact of the pandemic, expectations on the performance of State Enterprises had to be recalibrated.
“The Bank of Ghana also announced complementary measures to support businesses. Against these developments, expectations on performance of SEs have to be recalibrated. That said, and as we seek economic recovery to build forward better, it is crucial to emphasize that the practice where loss-making SEs continuously increase operating expenses (OPEX) through personnel and wage increases must give way to sound business management practices. All SEs, including almost the third of Other State Entities (OSEs) that recorded deficits, must reimagine their business models and strive for prudent financial management and operate within budget,” added the report.
The 2020 State Ownership Report is based on 132 SEs in total, made up of 47 SOEs, 17 JVCs, 54 OSEs and 14 Minority Interests.
This contrasts with the 106 SEs covered in the 2019 edition, the 2020 Report has also introduced a new sub-category known as “Minority Interests”.
The “Minority Interest” simply represents entities, mostly mining firms, in which the Government of Ghana maintains a shareholding threshold of less or equal to 10 percent.
It is also a measure of progress that out of the 132 entities, 79 submitted audited financial statements. This represents a marked improvement over the maiden State Ownership Report in 2017, where only five audited financials were submitted for analysis.
Nineteen (19) other SEs submitted draft accounts, whilst the number of management accounts received totaled thirty-four (34).
According to the Ministry, stringent steps are being taken to ensure that the forty-one (41) entities that could not honour their reporting obligations do so in the next reporting cycle.
