Fat pay cheques of heads of State-Owned Enterprises (SOEs), irrespective of their performance, have been identified as one core factor for the weak state entities in the country.
This is the observation of Dr. Kwabena Donkor, a corporate governance consultant, in an interview with The High Street Journal. The former Minister of Power cannot fathom why so many state-owned enterprises (SOEs) are struggling to stay afloat while their CEOs walk away with eye-watering salaries.
Dr. Kwabena Donkor says the underperformance of the SOEs, despite holding about 50% of the nation’s assets, is partly because there is no incentive for heads to perform since their salaries are guaranteed even if the company is “dying.”
He is therefore concerned over what can be described as a perverse incentive structure in Ghana’s public sector, where SOE heads receive hefty monthly salaries, sometimes as high as GHS 80,000, regardless of how their companies perform.
“If you pay the chief executive 60,000 Cedis, 70,000 Cedis, 80,000 Cedis a month, and that is not linked to performance, what is the incentive to perform?” he questioned.
Ghana’s state-owned enterprises, irrespective of sector, ranging from utilities and transport to agriculture and finance, have been bedevilled with inefficiencies, mounting losses, and in some cases, total collapse.
However, their executives continue to enjoy fixed, high-paying compensation packages that aren’t pegged to any tangible output.
For Dr. Kwabena Donkor, the solution to this is simple. He believes there should be a link between pay and performance. The former legislator for Pru East recommends that there should be a moderate salary for these executives, with the rest tied to performance and profits.
This proposal, he says, will bring two positive outcomes. First, there will be an incentive for these executives to perform and make profits. Secondly, when profits are made, they will pay dividends to the state that is the majority shareholder.
“If I had my way, no chief executive in the SOE space should be paid more than 30,000 Cedis a month, and rather, they should be paid performance-related allowances. I don’t care if these allowances even go to 200,000 cedis a month, at least they’ll be performance-based. At least the companies should make a profit. And at least the companies should pay dividends to the Ghanaian state,” he stressed.
Commenting on the composition of the boards of these SOEs, Dr. Kwabena Donkor called for urgent reforms in that area. He says many are stocked with politically connected individuals who bring little technical knowledge to the table.
“I will call on the Ghanaian state to take a second look at the composition of boards. What competencies are brought onto boards?” he asked.
He recommends building boards that are functionally balanced and industry-specific. For instance, an agricultural SOE should have a mix of agronomists, agribusiness experts, finance professionals, and project managers, not just political loyalists.
The views of the former minister are part of a growing chorus of experts and civil society voices calling for a comprehensive restructuring of Ghana’s SOE governance model. At a time when public finances are stretched and the state is turning to international partners for support, Ghana cannot afford to run bloated, underperforming state entities that bleed value.
