Just as the first president of the country, Dr. Kwame Nkrumah said that Ghana’s Independence will be meaningless unless it’s linked to the total liberation of the African Continent, renowned economist, Prof. Godfred Alufar Bokpin also says the President’s directive to the finance minister to ruthlessly cut central government expenditure will be meaningless unless it also ensures waste in State-Owned Enterprises (SOEs) are curtailed.
The Economic and Finance Professor at the University of Ghana Business School maintains that any attempt to reduce government expenditure without tackling wasteful spending in SOEs would be an exercise in futility.
This caution from Prof. Bokpin comes on the heels of President Mahama’s directive to his Finance Minister, Dr. Cassiel Ato Forson to, without fear or without, ruthlessly cut expenditure. The finance minister, with this directive, has been granted unlimited power to slash the spending of ministries, departments, and agencies.
But by focusing on the government spending alone while ignoring the financial inefficiencies within SOEs, the economist says will ultimately not lead to any real savings for the economy.
In an interview with The High Street Journal, he argued that SOEs such as the Electricity Company of Ghana (ECG), Ghana National Petroleum Corporation (GNPC), National Petroleum Authority (NPA), and others have become avenues for what he describes as wasteful and extravagant spending and financial mismanagement.
However, much attention is not given to them compared to the central government. Despite their huge spending, they do not bring in any value to the country but make losses to burden the government and the taxpayer.
For instance, a latest World Bank report on Ghana’s Public Finance Review indicated the operations and spending of COCOBOD pose huge fiscal risk to the government.
“It is not enough for the president to direct the minister of finance. If you look at the wasteful spending, you have central government and then you also have wasteful spending across state-owned enterprises, which manifest in cost for the taxpayer to come and pay. For instance, the Electricity Company of Ghana, GNPC, NPA, all those state-owned enterprises. There is a considerable level of abuse, where some of them, hitherto, did not even have deputy CEOs but under the previous administration, some had two or three deputy CEOs. All of them on salary, V8, and all of that,” he recounted.
He stressed that the waste in these state companies directly offset any savings made from cutting the central government expenditure. He is therefore recommending that in addition to the directive, the president must ensure that SOEs adopt a very lean-cost approach and prioritize efficiency to generate savings that can support the government.
Without this approach, Prof. Bopkin maintains the directive will result in a negative sum game.
“If they were to embrace lean cost approach and efficiency, they could actually make savings from there and support central government activities. The president should have a broader view of these cost-cutting measures. That is the only way this directive will be meaningful,” he told The High Street Journal.
“Because if you make savings from the central government administration and there’s so much waste going on from the state-owned enterprises, we are talking about… It’s just offsetting the savings that we are making. It will be a negative-sum game, not even a zero-sum game,” he emphasized.
The economist is not the only person making such a call as the same clarion call has been made by other analysts such as Dr. Richmond Atuahene. As the concerns grow, it is anticipated that the new government will pay particular attention to the SOEs to ensure prudent financial management.
