State-owned enterprises (SOEs) and joint venture companies (JVCs) are facing deepening financial distress’ and without urgent reforms, their continued deterioration could derail any prospects of economic recovery, officials have warned.
The mounting operational losses, particularly in critical sectors like energy and agriculture, threaten to widen fiscal deficits, weaken investor confidence and strain the government’s ability to meet its debt obligations.
Left unaddressed, these inefficiencies will not only prolong ongoing economic challenges but also undermine the structural adjustments needed to restore stability and growth.
A total of 19 SOEs and JVCs, spanning critical sectors such as energy and agriculture, have been identified for restructuring as authorities seek to curb fiscal risks and improve efficiency.
Finance minister Dr. Cassiel Ato Baah Forson, speaking at the National Economic Dialogue in Accra, underscored the severity of the situation, pointing to deep financial losses across SOEs.
“Nearly all of them—from electricity firms to agricultural companies—are in distress, and their continued financial deterioration poses a major risk to Ghana’s fiscal framework,” he said.
Cocobod’s debt pile-up
Among the most troubled entities is the Ghana Cocoa Board (Cocobod), which has seen its financial liabilities balloon to US$1.2 billion since 2021. The agency, tasked with regulating and financing the country’s cocoa sector, has struggled to meet forward contract obligations amid a steep decline in production.
Despite being the world’s second-largest cocoa producer, Ghana has witnessed nearly a 50 percent drop in cocoa output over the past three years, creating a severe cash crunch for Cocobod.
The seeming improvement in Cocobod’s financials in 2023 did not paint the full picture, with the Finance Minister making it clear that the numbers were misleading.
“Cocobod’s reported profitability last year was largely due to the suspension of debt service payments during debt restructuring,” Dr. Forson said.
The agency remains heavily indebted, with additional revenue losses of US$840 million stemming from lower-than-expected prices locked into forward sales contracts.
The financial turmoil has been exacerbated by smuggling activities, as wide price differentials between Ghana and neighbouring countries – such as Côte d’Ivoire – have pushed cocoa beans across borders.
Government officials estimate that these market distortions have cost local farmers and the state millions in potential revenue.
Power sector woes
The Electricity Company of Ghana (ECG), another key SOE under scrutiny, continues to grapple with operational inefficiencies and mounting financial losses. The company collects only 62 percent of the electricity it distributes; and of that, just 65 percent is used to settle payments to suppliers through the government’s Cash Waterfall Mechanism.
This inefficiency has contributed to the broader financial instability of the energy sector, which now carries an annual deficit of about US$2.2billion.
“Fixing the energy sector requires radical measures. We cannot continue with a system where nearly half of the cost of power generation is not recovered,” argued.
Government transfers to ECG and other energy sector entities reached US$2.1 billion in 2023 and 2024, yet unpaid legacy debts stood at US$1.3 billion at the end of 2022. Without urgent interventions, the cumulative energy sector shortfall is projected to exceed US$9 billion by 2026.
Reform agenda
In response, the government is prioritising reforms aimed at reducing inefficiencies and restoring financial stability in SOEs.
One of the key strategies is tightening oversight of operational expenditures while phasing out non-essential subsidies.
Authorities are also considering restructuring the governance framework of SOEs, introducing performance benchmarks and enforcing greater transparency in financial reporting.
Reforming Cocobod will require a shift in how the agency finances its operations. The government is exploring alternative funding models, including domestic capital market instruments, to reduce reliance on syndicated loans. Additionally, efforts are underway to renegotiate forward contracts to minimise revenue losses tied to price differentials.
For ECG and the broader energy sector, reforms will focus on improving revenue collection and reducing technical and commercial losses.
Tariff adjustments have been floated as a possible measure, though the Finance Minister stressed that “tariffs should not be used to reward inefficiencies”.
The government is also reviewing the effectiveness of existing power purchase agreements to ensure they align with Ghana’s energy demand and affordability levels.
Balancing fiscal risks
The broader fiscal impact of SOE inefficiencies remains a major concern. With non-discretionary spending—such as wages, interest payments and subsidies—consuming nearly 70 percent of government expenditure, the room for fiscal manoeuvring is shrinking.
Officials are pushing for greater discipline in public financial management to curb wasteful spending and improve efficiency in capital investments.
“We need to ensure that public funds are directed toward productive sectors that can generate long-term economic value,” Dr. Forson said.
The government’s reform drive aligns with discussions with Ghana’s international creditors under the IMF-supported programme. Strengthening SOE financial management is seen as a critical component of meeting fiscal targets under the agreement.
“The financial sustainability of SOEs is not just about balance sheets—it’s about the broader macroeconomic stability of the country,” the finance minister said.
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