The State Interests and Governance Authority (SIGA) has taken note of recent statements made by Mr. Franklin Cudjoe, Founding President of IMANI Africa, calling for the dissolution of SIGA. The Authority believes that the Imani President’s position will have been different had he sought clarifications from SIGA on the many initiatives and activities currently being pursued to exact performance and compliance from our Specified Entities. The Authority, per this press release, seeks to educate the public on the significant contributions, impact, and continued relevance of SIGA in the governance of State-Owned Enterprises (SOEs) in Ghana.
In various jurisdictions around the globe, State-Owned Enterprises (SOEs) have been established as key pillars of national economic development strategies. Despite their significant economic role, evidence from the 1970s and 1980s reveals that SOEs generally underperformed compared to private firms, largely due to mismanagement and fragmented oversight among other factors. To address these challenges, many countries adopted a central oversight model, aimed at ensuring that SOEs are managed efficiently, transparently, and in alignment with national economic goals. Central oversight bodies have since been instrumental in safeguarding public assets, improving SOE performance, and promoting economic growth. In 1971, Singapore established SIGA’s counterpart called Temasek as the centralised body responsible for improving SOE performance and assets Today, countries like China, France, India and South Korea are model examples of the effectiveness of centralised oversight of SOEs in national development.
In 2015, a diagnostic study conducted by the World Bank on Ghana’s SOE sector identified significant challenges in governance, management, and financial performance. The findings revealed that the oversight of SOEs was dispersed across various government actors, resulting in overlapping responsibilities and authority. This fragmentation created irregularities in information between SOE management, the government, and civil society. Furthermore, the lack of publicly available comprehensive financial information on SOEs severely undermined effective state oversight, strategic planning, and decision-making. The findings highlighted the critical need for a more structured and centralised approach to SOE oversight in Ghana, recommending reforms aimed at enhancing efficiency and accountability. This assessment laid the groundwork for the establishment of the State Interests and Governance Authority (SIGA), which was formally created through the promulgation of the SIGA Act (Act 990) in 2019.
SIGA
SIGA is mandated to oversee and administer the State’s interests in Specified Entities which comprises State-Owned Enterprises (SOEs), Joint Venture Companies (JVCs), and Other State Enterprises (OSEs). SIGA has an additional mandate to develop a code of corporate governance guidelines to promote sound governance within the institutions it oversees and introduce private sector practices to drive efficiency, sustainability and profitability where applicable.
SIGA’s strategic intent is hinged on three critical results: Organisational Excellence; Operational Excellence; and Financial Sustainability. The results drive the success indicators to attain the following broad goals:
- Achieving SEs’ Contribution to GDP of no less than 30 percent
- Consistently minimising losses in the Annual State Ownership Report
- Embedding Efficiency as a dominant characteristic of the SEs.
SIGA’s strategic plan has three (3) phased objectives:
- The Short-Term objective of Transition and Consolidation which spans from inception up to FY2024.
- The Medium-Term objective of Expansion and Growth spans 2025 to FY2027.
- The Long-Term Objective of Transformation also spans FY2028 to FY2029.
SIGA has, over the past 5 years, made significant strides towards attainment of its short-term objectives. The Authority has been set up with competent staff who work in a matrix approach, and with synergies. In addition to the existing laws (SIGA Act, PFM Act, PFMR), there was the urgent need to develop additional policy documents and frameworks to guide and strengthen SIGA’s oversight work. Through collaborations with other stakeholders, SIGA has developed the Code of Corporate Governance which received cabinet approval in FY2023. Additionally, SIGA worked with MoF/PIAD to develop the State Ownership Policy which was approved by Cabinet in FY2023. These policy documents have provided further guidance and direction to strengthen the legal and institutional framework for oversight, and good corporate governance culture in SEs.
To ensure legitimacy with SEs and other stakeholders, the Authority has successfully developed the list of Specified Entities which also received Cabinet approval in FY2023. The list provides clarity on SIGA’s scope for SE oversight. The current list has one hundred and seventy-five (175) SEs comprising fifty-three (53) SOEs, forty-seven (47) JVCs and seventy-five (75) OSEs. This has strengthened engagements with SEs through the signing of annual performance contracts, monitoring of SEs’ operations in line with performance contract targets, annual evaluation of performance to provide feedback for improvement, training of boards and entity heads on good corporate governance, annual stakeholder forums, facilitating request for government support for distressed SEs, portfolio management among others. Additionally, SIGA has facilitated engagement with other stakeholders to harmonise oversight and avoid duplication of oversight. Another cardinal mandate of SIGA is to advise and make recommendations to Ministers and government for approval. Accordingly, SIGA together with other stakeholders has completed the equity study of SEs and a report on disposal of defunct SEs. These have also received cabinet approval for implementation. The Authority’s work has earned legitimacy with local and international agencies who have chosen to work with SIGA to transform the fortunes of SEs in Ghana.
To update and enhance the monitoring and evaluation of SEs to deliver value, SIGA has commenced a real time monitoring project which is meant to digitalise the SE reporting space and ensure that SEs can log onto a portal and upload all financial and operational information in real time for analysis and decision making. The pilot stage of phase one (1) is almost completed and significant amount of data from SEs have been uploaded onto the portal. The next stage will be to pilot the system with selected SEs, whilst an assessment of all SEs’ capabilities to report real time will also commence. This will significantly improve the time to analyse and report on SE performance for effective and timeous decision making. It will also enhance accuracy of reports due to the reduction of human interface with data.
Outcomes of SIGA’s work
Significant outcomes have been identified over the years through the work of SIGA. Compliance to preparation and submission of annual financial statements which used be non-existent has now been reversed. From eighteen (18) financial statements prepared and submitted by 18 SEs in 2016, the record as of July 2024 shows that one hundred and forty-seven (147) SEs prepared and submitted financial statements for FY2023. This is significant because the preparation of financial statements marks the beginning of transparency and accountability. Through SIGA’s efforts, SEs today are not operating in the dark. Their performance is constantly monitored and reported on. The annual state ownership report which had eighteen (18) SEs covered in FY2016, currently has one hundred and forty-six (146) SEs reported on in FY2022 SOR and one hundred and forty-seven (147) in the FY2023 SOR, both of which are to be published before end of August 2024. The publication of FY2023 SOR in August will also mark the first time that the SOR is published in real time. This effort by SIGA will ensure that policy makers and people of Ghana will have real-time access to the financial and operational performance of SEs, for timeous decision making. Analysis of the performance of SEs over the years has shown that revenues are improving, losses are reducing, and the net worth of SEs are also improving marginally. Analysis has also shown that the 10 biggest SEs who control over 80 percent of the entire SE assets must become the focus of attention because a marginal improvement in the fortunes of these SEs can result in a major shift in performance paradigm, while a drop in performance has cascading effect on the rest of the SEs and the economy.
The annual performance contract enables Government to negotiate and sign performance contracts with SEs. Indicators and targets are negotiated which forms the basis of monitoring and evaluation. From FY2016 in which only six (6) SEs signed performance contracts, the FY2024 performance contract was negotiated with seventy-nine (79) SEs. The increase in coverage of the performance contract has enabled in-depth assessment of SEs’ operations and governance, and feedback provided to enable them to improve. The evidence available shows a gradual appreciation of the need to improve in corporate governance, prudent management of projects and resources and effective capacity building of staff.
Impacts of SIGA’s work
The impacts of SIGA’s work can be assessed by aligning the outcomes discussed above to the broader goals of the Authority in line with the strategic plan.
The Authority set out to attain SE contribution to GDP of 30 percent – Data analysed for the FY2022 SOR showed that the assets of only SOEs in FY2022 represented 40.46 percent of Ghana’s FY2022 GDP at purchasers’ value. However, a lot still need to be done to improve on the returns from this sheer asset size.
The Authority set out to minimise losses of SEs – The 2023 SOR provisional data shows that the aggregate SOEs’ losses dropped from GHS14,402 million in FY2022 to GHS2,573 million in FY2023. Losses from majority JVCs dropped from GHS1,506.72 million in FY2022 to GHS1,330.81 million in FY2023. OSEs’ net deficit dropped from GHS59,862.34 million in FY2022 to GHS7,719.87 million in FY2023.
SIGA’s initiatives to foster close collaboration with other oversight bodies have played a crucial role in reducing losses within the State-Owned Enterprises (SOE) sector, particularly those caused by irregularities and infractions. By holding several engagements with these bodies and relevant stakeholders, SIGA has worked to streamline processes and enhance the effectiveness of their oversight roles.
As a result of these efforts, the 2023 Auditor General’s Report showed a significant reduction in total irregularities, amounting to GHS8.799 billion among Public Boards, Corporations, and other Statutory Institutions—a 41.6% decrease from the GHS15.059 billion reported in 2022.
The Authority set out to embed efficiency as a dominant character in SEs – Data from the 2022 Performance Contract Evaluation shows that more than half of the sixty-four (64) SEs that signed the FY2022 performance contract attained a score of 3.000 and above on the 5-point scoring scale. This signifies a growing awareness and acceptance of efficiency as a necessary ingredient for success. A lot still needs to be done to improve.
Next steps
SIGA continues the agenda of transforming SEs to reduce the fiscal burden they pose and contribute to the socio-economic development of Ghana. With support from donor partners, the Authority is pursuing strategic activities in line with the strategic plan to realise this. The World Bank, under the Public Financial Management for Service Delivery (PFM4SD) is supporting SIGA to conduct a comprehensive evaluation of sixteen (16) SEs. Majority of these SEs are part of the top 10 SEs by size who are also struggling with performance. Through this exercise, SIGA will make a strategic recommendation to cabinet on the future of these SEs, with the aim of improving efficiency and contributing to economic development whilst reducing fiscal risks posed by these SEs. Other projects under the PFM4SD include support to preparation of the State Ownership Report, support to train all governing boards on the approved code of corporate governance, digitalization of the SE reporting space for real-time reporting and analysis, development of SIGA Regulations, restructuring of SEs, among others.
The French Government under the GHASORG programme is also working with SIGA on diverse projects – support to improve the monitoring and evaluation framework and tools for oversight, development of corporate governance assessment tools, support to improve the real-time reporting objective, continuous training of the boards of our SEs and capacity building among many others.
SIGA will continue to consolidate the modest gains made in the SE sector to complete the transition and consolidation phase.
Looking Ahead
The Authority will press on to the medium-term objective of Expansion and Growth from FY2025. This will be marked by optimisation of the value of GoG shares in SEs, Rationalisation of SE portfolios to align with mandates, phase 2 of real-time monitoring and consolidation of funding for the Authority and SEs.
The Authority will continue to deepen relationship with stakeholders with the aim of courting support to effectively monitor, evaluate, and support SEs with recommendations and actions to improve on their performance to turn efficient and profitable where applicable. In that same regard, exit decisions such as full or partial privatisation, listing on stock exchange, disposal of defunct assets among others shall also be pursued.
As SIGA marks five years since its establishment, the Authority remains committed to its mission of enhancing the performance and governance of SOEs. While challenges remain, the progress made thus far is a testament to the importance of centralized oversight in the SE sector. SIGA will continue to work with all stakeholders to ensure that SEs are well-positioned to drive economic growth and development.
We encourage public support for SIGA’s efforts to ensure SOEs contribute to national development and invite constructive dialogue from all stakeholders. To further this, SIGA will host an Editors’ Forum later this month to educate the media and the public on our mandate and impact, providing a platform to share insights and discuss our progress. A follow-up stakeholder engagement will also be held with civil society, academia, and the public on the subject. Whilst at that, the general public is invited to access information on the Authority’s activities and programmes at our office during normal working hours within the week and on our website -www.siga.gov.gh and on all our socials.
Issued by the Corporate Affairs Division, SIGA
