PREZ ASSENTS TO LAW PROTECTING STATE INTEREST IN SOES

President Nana Addo Dankwa Akufo-Addo assented to the State Interests and Governance Authority (SIGA) Act in Accra last Friday.

The SIGA Act seeks to establish an authority to oversee and administer state interests in state-owned enterprises (SoEs), joint venture companies and other entities in the country.

It also aims at ensuring that those entities adhere to good corporate governance practices to promote the growth of industry and commerce.

The Executive Chairman of the State Enterprises Commission (SEC), Mr Stephen Asamoah-Boateng, told the Daily Graphic that state institutions were now set for “real change in the way things are done.

There is massive work ahead to turn their fortunes around for Ghanaians to feel the benefits of state assets.”

Memorandum

A memorandum accompanying the SIGA Bill which was signed by the Minister of Finance, Mr Ken Ofori-Atta, said a report on the aggregate performance of SoEs revealed that the sector recorded a significant net loss of approximately GH¢1.3 billion at the end of the 2016 financial year.

“In terms of returns on investments made by the government in these entities, available data on dividend payments reveal that only nine companies, comprising two SoEs and seven joint venture companies, paid dividends in 2017,” it noted.

It said none of the interventions made by the government in the past had yielded any positive returns and for that reason the government had resolved to adopt a model of single entity to improve the existing legal framework for SoEs and other entities in which the state had interest.

The memorandum further noted that the SIGA would enhance coordination of the management of state enterprises to achieve greater accountability, stronger fiscal risk management and the mitigation of potential risks, among other advantages.

Passage of bill

Parliament, on May 29, 2019, passed the SIGA Bill into law to make for the establishment of an authority to oversee the state’s interests in SoEs, joint venture companies and other entities.

According to the report of the Finance Committee of Parliament signed by its Chairman, Dr Mark Assibey-Yeboah, the new law would reform the governance structure of all entities.

It said many SoEs had consistently underperformed in relation to their objectives, while others continued to incur losses, prompting an assessment of the corporate governance framework of the SoE sector from 2013 and 2015.

The report said the assessment, which focused on 39 wholly owned SoEs, revealed an aggregate loss of approximately GH¢15 million as of the end of the 2012 financial year.

Coordination

The report added that the authority would enhance coordination in the management of state interests and also ensure a clear line of accountability from SoEs and other entities.

“It is expected that this will boost performance and enhance the profitability of the entities and ultimately lead to increased returns to the state in the form of dividends and surpluses,” it said.

It said after the reorganisation of the entities, any member of staff found to be misplaced would be absorbed into another public service organisation where his or her expertise would be most needed to address any job losses.

On debts owed the SoEs, the report said the State Enterprises Commission was in the process of compiling an up-to-date debt position of the SoEs, adding that the authority would be mandated to report on the financial status of SoEs, including their debt portfolios, annually.

The initial cost of setting up the authority, it said, was estimated at GH¢15,151,076, which included compensation for employees, use of goods and services, as well as capital expenditure.

Source: GraphicOnline

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