Ghana’s State Firms Face Reform Push as Financial Losses Threaten Growth and Fiscal Stability

Ghana’s SOEs generate significant economic activity but rising liabilities, persistent losses and governance weaknesses pose growing risks to public finances and infrastructure delivery. Stronger fiscal oversight, merit-based governance, transparent procurement and better investment planning could protect taxpayers while attracting development finance and private investment.

Ghana's state-owned enterprises are central to the country's economy, delivering electricity, water, transport, petroleum services, cocoa-sector support and critical infrastructure. But an assessment by the International Monetary Fund's Fiscal Affairs Department warns that these companies could remain a major source of pressure on public finances unless stronger governance is matched by financial discipline. The IMF finds that Ghana has significantly improved its institutional framework, particularly through the State Interests and Governance Authority (SIGA), but persistent losses, growing liabilities, weak procurement and political influence over governance continue to limit progress.

Ghana's SOEs generated about GHS 133.7 billion in revenue in 2024, equivalent to roughly 11.5% of GDP, and controlled around GHS 395 billion in assets. However, their liabilities reached approximately GHS 282 billion, or 25% of GDP, compared with GHS 35 billion in 2015. Aggregate losses also worsened, increasing from about GHS 1.7 billion in 2021 to GHS 9.7 billion in 2024, despite strong revenue growth.

When Public Companies Become a Fiscal Risk

The figures matter because financial problems at major SOEs can eventually become government liabilities. A relatively small group of large companies dominates Ghana's state corporate sector, increasing the potential impact of financial distress on the national budget.

Energy is the biggest concern, accounting for around 61.9% of SOE assets. The Electricity Company of Ghana (ECG) illustrates the scale of the challenge. ECG reported approximately GHS 76.25 billion in assets and GHS 36.1 billion in operating revenue in 2024, yet recorded a net loss of about GHS 8.3 billion. Trade and other payables stood at approximately GHS 54.5 billion.

Around 40% of electricity entering ECG's network was estimated to be effectively unbilled or uncollected because of technical and commercial losses and non-metered consumption. Such inefficiencies can weaken the entire electricity supply chain, affecting generators, suppliers, businesses and ultimately consumers.

COCOBOD presents another important risk because its finances are exposed to cocoa production, producer prices, foreign exchange and borrowing costs. Its liabilities increased from approximately GHS 14.7 billion in 2020 to GHS 28.5 billion in 2022, before declining by around GHS 4 billion in 2023.

Why Better Transparency Matters for Policymakers

One of the IMF assessment's most important findings concerns quasi-fiscal activities. SOEs may be required to provide electricity or other services below cost, implement social policies or absorb financial risks without receiving full and transparent compensation from the government.

This makes it difficult for policymakers to distinguish genuine operational inefficiency from the cost of implementing public policy. It can also hide the true cost of government interventions.

The IMF recommends standardized reporting of these activities and stronger disclosure of financial flows between SOEs and the budget. Fiscal-risk analysis should concentrate on macro-critical and high-risk enterprises rather than treating every SOE equally.

Better coordination between the Ministry of Finance and SIGA is equally important. Ghana currently has overlapping reporting and monitoring arrangements. Digital information-sharing, standardized templates and forward-looking financial analysis could allow policymakers to identify financial problems before they require expensive government intervention.

Governance and Infrastructure Need Stronger Discipline

Ghana has made measurable progress in institutional reform. SIGA expanded performance contracts from only six entities in 2016 to 70 in 2024, while the number of entities submitting financial statements increased from 18 in 2017 to 152 in 2024.

However, implementation remains uneven. Political figures and senior government officials continue to occupy SOE board positions, potentially weakening board independence. The IMF therefore recommends transparent, merit-based appointments and a gradual reduction in active politicians and high-level officials serving on boards.

Infrastructure investment presents another challenge. SOEs manage strategically important electricity, water, port, airport and transport assets, but investment planning is often short-term and maintenance is inadequate.

Routine maintenance expenditure among major infrastructure SOEs remains below the report's benchmark of at least 2–3% of asset replacement value across several infrastructure categories. Underfunding maintenance can increase electricity losses, service interruptions and future rehabilitation costs.

Procurement problems also raise risks. The report highlights ECG's take-or-pay power contracts, COCOBOD's direct award of 87% of contracts in the COCOROADS portfolio, and an Auditor-General finding involving US$145 million of electricity meters purchased through 50 contracts without adherence to procurement requirements.

What Reform Means for Investors and Development Partners

For international development partners, stronger SOE governance would improve the reliability of institutions responsible for implementing infrastructure and development programmes. Support could therefore focus not only on financing new projects but also on strengthening fiscal-risk analysis, digital reporting systems, procurement capacity, project appraisal and corporate governance.

For private companies and investors, reform offers substantial opportunities in electricity, water, logistics, ports, infrastructure finance and public-private partnerships. However, weak procurement, delayed payments, poorly designed contracts and financially distressed SOEs can increase commercial risks.

Ghana therefore needs to move from building governance frameworks to enforcing them. Priority actions include identifying high-risk SOEs, integrating their risks into budget decisions, introducing stress testing, transparently reporting quasi-fiscal activities, professionalising boards, enforcing audit requirements and independently reviewing major infrastructure investments.

The larger objective is not simply to make SOEs profitable. Ghana needs state enterprises capable of delivering reliable public services and productive infrastructure without repeatedly transferring their financial problems to taxpayers. Stronger SOEs could protect fiscal stability, improve infrastructure quality, attract private capital and create more space for government spending on development priorities.