Ten state-owned enterprises (SOEs) accounted for more than 90 percent of losses recorded across Ghana’s state-owned enterprise sector in 2024, posting combined net losses of GH¢8.8 billion, equivalent to about 1 percent of Gross Domestic Product (GDP).
An assessment by the International Monetary Fund (IMF) showed that the losses were heavily concentrated among a relatively small group of large enterprises, with the Electricity Company of Ghana (ECG) emerging as the single biggest contributor.
The 10 entities are the Electricity Company of Ghana, Volta River Authority, Ghana National Petroleum Corporation, Ghana Cocoa Board, Bui Power Authority, Ghana National Gas Company, Northern Electricity Distribution Company, Ghana Ports and Harbours Authority, Consolidated Bank Ghana and Ghana Grid Company.
According to the IMF, ECG alone accounted for 85 percent of aggregate SOE losses in 2024, equivalent to about 0.7 percent of GDP, highlighting the scale of financial challenges confronting the country’s power sector.
The Fund identified rising financing costs as one of the biggest factors weighing on the profitability of major state-owned enterprises.
Aggregate financing costs across the affected SOEs reached GH¢9.4 billion in 2024, almost six times higher than their combined earnings before interest and tax of GH¢1.57 billion.
The IMF said the figures point to a fundamental challenge in the financial structure of several major state enterprises, where debt-servicing obligations have become significantly larger than the income generated from their core operations.
“The bulk of these finance costs stem from a limited set of highly indebted entities, including GWCL, COCOBOD and energy sector SOEs, confirming that loss-making is heavily concentrated and could be addressed via a set of measures focused on such priority entities,” the Fund said.
The findings suggest that addressing the financial weaknesses of a relatively small number of highly indebted enterprises could have a significant impact on the overall performance of the state-owned enterprise portfolio.
Beyond high financing costs, the IMF identified several structural weaknesses that continue to undermine the commercial viability of some of Ghana’s largest SOEs.
These include tariffs that remain below cost-recovery levels, unidentified and uncosted quasi-fiscal activities, as well as market conditions that affect the operational and financial performance of state enterprises.
Tariffs below cost-recovery levels, particularly within the utilities sector, can prevent companies from generating sufficient revenue to cover operating costs, debt obligations and investment requirements. This, in turn, can increase dependence on borrowing and government support.
The IMF also raised concerns about quasi-fiscal activities undertaken by SOEs without clear identification and costing, noting that such obligations can weaken financial performance when enterprises are required to perform public policy functions without adequate compensation.
Despite the significant losses recorded by major enterprises, the Fund said there were positive pockets of performance within the SOE sector.
According to the IMF, the overall figures mask substantial differences between enterprises and subsectors, with some entities demonstrating that stronger commercial discipline, sound management and supportive sector policies can improve financial outcomes.
The Fund said these examples provide an indication of what could be achieved through targeted reforms, particularly if measures are focused on the enterprises responsible for the bulk of losses and financing pressures.
The concentration of losses among a small number of large SOEs also underscores the potential fiscal risks facing government, as persistent financial weaknesses could increase pressure for state support, debt assumption or other interventions.
With SOE losses equivalent to about 1 percent of GDP in 2024, the IMF’s findings reinforce the need for reforms aimed at improving commercial discipline, addressing unsustainable debt burdens, ensuring appropriate cost recovery and clearly identifying the cost of public policy obligations imposed on state-owned enterprises.
Source: businesspostonline
