- Ghana’s SOE Reform Enters Harder Phase as Government Links Leadership to Profitability and Value
President John Dramani Mahama has signalled that Ghana’s chronically loss-making state-owned enterprises will no longer be allowed to pass the cost of weak management and persistent underperformance indefinitely to taxpayers.
Speaking at a conference organised by the State Interests and Governance Authority at the La Palm Royal Beach Hotel, the President said the era in which recurring losses could quietly migrate onto the national balance sheet must end.
“Persistent losses will no longer be quietly absorbed into the national budget,” he said.
The statement places SOE reform firmly inside Ghana’s fiscal-consolidation agenda rather than treating it merely as a corporate-governance exercise. State enterprises operate across ports, power, water, factories, pension assets, land and government shareholdings, meaning their financial weaknesses can eventually become public liabilities.
The problem is that ownership of strategically important assets has not always translated into strong commercial or operational performance.
Mahama’s message to boards and chief executives is that continued operation will no longer be enough to justify leadership. “Leadership positions in state-owned enterprises must be linked to measurable performance, value creation and profitability,” he said. That raises the standard from institutional survival to demonstrable economic and public value.
The fiscal logic is straightforward. When an SOE cannot meet its obligations, government support can emerge through direct transfers, guarantees, recapitalisation, arrears or other interventions that ultimately weaken the public balance sheet.
What begins as a company-level problem can therefore become a sovereign fiscal problem, particularly when the affected entity provides an essential service that government cannot realistically allow to collapse.
Yet the harder policy question is whether profitability should become the universal test. Some SOEs exist to provide services that may be economically important but commercially unattractive, including water, infrastructure and other activities where the full social return does not appear in the company’s income statement.
The challenge is therefore to separate legitimate public-service obligations from losses caused by inefficiency, poor governance, excessive costs or weak commercial decisions.
That distinction will determine whether the new policy becomes genuine reform or simply another round of pressure on management teams.
If an SOE is required by government to provide a service below commercial cost for social or strategic reasons, the cost of that obligation should be identified explicitly and, where appropriate, compensated transparently.
Doing so would make it harder for inefficiency to hide behind public-service rhetoric while giving Parliament and taxpayers a clearer view of where public money is being used.
Mahama also framed the issue as one of stewardship rather than political ownership. “These assets do not belong to any government, a board, or a chief executive. They belong to the people of Ghana, and you and I hold them only in trust for the people,” he said.
That principle places an obligation on boards to demonstrate what citizens are receiving in return for the capital, guarantees and strategic privileges committed to state enterprises.
SIGA therefore sits at the centre of the reform challenge. Its mandate gives it a key role in monitoring government interests, assessing performance and determining whether public enterprises are delivering against agreed expectations.
The test should differ by institution: profitability may matter most for commercially oriented companies, service delivery for utilities, infrastructure performance for strategic entities and measurable returns for public investment vehicles.
The danger lies in turning “profitability” into a blunt instrument. An enterprise could improve its accounts by increasing tariffs, cutting staff or selling assets, while simultaneously weakening access to essential services or eroding long-term strategic value.
A more credible framework would judge entities against clearly defined mandates, transparent financial targets, operational indicators and consequences for persistent underperformance.
The institutional weaknesses are already visible in reporting discipline. The document cites reports that only 61 state entities submitted audited accounts on time in 2025, while only 72 of 148 state entities signed performance contracts during the same period.
Those numbers suggest that before government can judge commercial performance consistently, it must first ensure that basic governance instruments such as timely audits and enforceable performance contracts are functioning.
That is why the fiscal reform cannot stop at presidential warnings. Stronger SOE performance requires professional boards, credible financial reporting, internal controls, procurement discipline and consequences when agreed benchmarks are repeatedly missed. Without those mechanisms, the risk is that political pressure eventually weakens and familiar bailout patterns return.
For investors and creditors, the stakes are significant. Reducing repeated SOE bailouts could create more room for productive government spending, lower contingent-liability risks and reduce pressure on public borrowing.
Better-performing state enterprises could also become contributors to the fiscal system through dividends, taxes and other payments rather than recurring consumers of scarce public resources.
The political difficulty, however, should not be underestimated. Many public enterprises have large workforces, powerful stakeholders and entrenched institutional interests, making reform potentially contentious when it touches staffing, procurement, pricing, management appointments or asset use.
The credibility of the new standard will depend on whether it is applied consistently, including to strategically important enterprises with strong political constituencies.
The bigger question is therefore no longer simply whether government can keep an SOE alive. It is whether the enterprise creates sufficient economic or social value to justify the capital, guarantees and fiscal support committed to it.
“Public ownership must produce public value,” Mahama said, setting a standard that is ultimately more demanding than profitability alone because it requires evidence of what citizens actually receive from state ownership.
If that principle is matched by transparent accounting, professional governance and clearly defined public-service obligations, Ghana could reduce one of the less visible pressures sitting on its sovereign balance sheet.
But if persistent losses continue to be rescued without structural reform, the fiscal burden will eventually return to the taxpayer in one form or another. Mahama has drawn the line; the real test is whether government can maintain it when politically difficult decisions begin.
