INTRODUCTION
Organizational growth and productivity is solely based on healthy and effectivity risk governance framework of the institution. For organizations to ensure that proper risk governance framework is in place, there is the need for review of all risk management practices, policies and systems.
Organizations and corporations fail as a result of ineffective adherence of risk management procedures and policies. Again, the separation of risk managers from the organizational board and management also contribute to the failure of most State Owned Enterprises (SOEs).Observations made on past managements of SOEs revealed that risk and compliance managers have not being considered as part of the core implementation team of organizational strategy.
The organization’s board and management team is responsible for the success of every State Owned Enterprise. The effectiveness of their oversight responsibility and governance approach will determine the growth and value creation of the SOEs.
WHY SOEs FAIL IN AFRICA
An introspective view of the continues failure of most SOEs in Africa revealed that there is governance and risk gaps.in addition to this identified problem, is noncompliance and excessive government interference in the operations of the SOEs. A steep analysis and review of the entire operations and performance of SOEs points to several factors.
Appointments of Board and Top Executives
Several evidence across African counties has shown that SOEs have failed as a result of government appointments to the board and top executive management of state owned enterprises. Especially in Ghana, since independence, about 85% of all SOEs have failed because of government total involvement in the appointment of board members and top executive management. Political loyalty and sponsorship has always being chosen over competence and experience during appointment of board and management of SOEs and this has contributed to the failure of almost all SOEs in Ghana. Performance and sustained growth of SOEs has dwindled since corporate governance and risk procedures are mostly overlooked and selfish decision making to favor political government take the top spot of the scale of preference of the board and management. It is evidence that positions of influence in SOEs are mostly filled by political stalwarts, whose objective and interest is to support government interest at the expense of citizen’s and shareholder.
Stakeholders Involvement
In a typical management and SOEs setup for accountability and going concern assurance, it is between the owner, steward and independent oversight responsibility function. The trio forms the basic accountability structure of the SOEs. The Citizen (owner), the Auditor and the executive (oversight steward) form the accountability structure of SOEs. Mostly, the citizen who is the owner is unfamiliar about the management of the SOE or their role in the governance structure. Information denial and sometimes ignorance of the citizenry also contribute to the failure of SOEs in Africa, especially Ghana. This serves the interest of corrupt government individuals and top executives at the expense of the citizenry and the SOEs.
Total empowerment and free flow of information on SOEs performance and governance is demanded for accountability assurance and growth sustainance. This will save a lot of SOEs from failing or better still collapsing.
The Culture of Corruption
State Owned Enterprises over the years have failed due to breakdown of corporate governance procedures, internal control processes and risk and compliance structures. The love for fraud and corruption by appointed board members and top management executive has been the core problem most SOEs in Africa especially Ghana face. Selfish interest and greed on the part of top executive over the main business objective has caused most SOEs to fail.
Failed government commitment for payment of Subsides has piled up over the years and has become huge debt on the balance sheet of most state corporations. Conversely, prices are set to protect “inefficient enterprises or provide resources for cross-subsidization (Mwaura, 2007).The 11th International Anti-Corruption Conference (2003) established that ‘A crisis in ethics lies at the heart of recent failures in self-regulation, and underlines the necessity for appropriate government regulation, especially in areas vulnerable to corruption.
Most State Owned Enterprises have failed due to continue poor performance, mismanagement of resources and lack of ownership of responsibility by top management. There is enough evidence to prove that SOEs have performed poorly due to mismanagement of resources from top management to operation staff.
Unlike the private sector and multinational institutions, state owned enterprises rarely have clear corporate targets set or objective understood by employees.in most cases, where targets are set, there are insufficient opportunities and resources available for value creation and sustained performance.
Remuneration discrepancies and reward systems have being major problem resulting to poor performance of SOEs. A lot of issues surrounding the wastage of resources by top management and huge monetary rewards that chief executives earn have caused most SOEs to fail. Such discrepancy, coupled with the setting of salaries of top chief executives by the office of the President has contributed to lack of motivation. As said by the great man “If you do not know where you are going, any road will lead you there’ (Lewis,N. D)
Recommendations for the way forward
There is the need for comprehensive sate policy on the governance of State Owned Enterprise (SOEs) in Ghana/Africa. The success and growth sustenance of SOEs are key to National development. A nation with the main objective of job creation and economic development must ensure that all state owned enterprises are managed well and all corporate governance standards are adhered to. Government must ensure that very qualified and experience individuals are appointed to the boards and top executives positions of all SOEs.
Going forward government must ensure that strategy is put in place to refinance all state owned enterprises. Again, there can be partnership between government and the private sector to manage SOEs to ensure there is growth and sustenance of their existence.
I recommend that government pay off all debts owed the SOEs in the country and make all the government agencies and ministries take full control of their expenditure and revenue generation.
Government should immediately stop appointing unskilled, uneducated, inexperience and party folks to sensitive and key positions of SOEs.
Government should sanction all appointees and individuals who cause financial loss and stagnation to the growth of SOEs as a result of selfish and corrupt gains.
Conclusion
It is government’s responsibility to ensure that SOEs in the country are managed well to create jobs. The growth sustainability of SOEs is key to national development and economic freedom. As a nation we all have individual responsibilities to ensure that our country grows and move forward for financial and economic stability and freedom.
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