John Boadu, the Director-General of the State Interest and Governance Authority (SIGA), has stated that some state enterprises continuously post losses because they are not set up for profit. He said some of the 175 state enterprises are set up to provide social services to the citizens and thus are not positioned for profit making.
There are “175 [enterprises]. That is the number of enterprises we have. Let me give you the details of the breakdown. SOEs [state-owned enterprises] were 53, JVCs [joint venture companies] were 47 and other specified entities were 75,” he told Joy News.
According to John Boadu, “with the 175 that we’ve had…those that have signed performance contracts, you realize that there’s much improvement.” He added that there is a need “to do a lot more.” Adding, “One thing you must notice is that most of these organizations are not necessarily set up to make profit. Some of them are for the provision of social good for the citizens of this country.”
Giving an example of one SOE that was not set up for business and how these types of companies run losses regularly, he said mentioned the Volta River Authority [VRA].
“VRA for instance, they are into helping in the distribution of electricity. They will be into transport, real estate, provision of health, provision of education and all that.” He said it was okay to offer free services because the companies were set up with people’s money so they needed to benefit. “It was good at that time, because at that time, we had then established with people’s resources from the places that they give it out for free.” John Boadu added that “those services add to the losses they are making,” a confirmation that some of the enterprises are not set up for profits.
Though businesses like that are not set up for profit, he said there is the need to maintain operations so these companies have started being innovative in their approach to operation. He said they now break some of the services out into standalone services and run them independently to make profits.
“Now what they’ve been able to do is that, they’ve started hiving off some of these important institutions and running them as business. So for instance, if you go to VRA now, their hospitals run as a business, although there’s a social component part of it, to reduce their losses,” he stated.