Renowned economist Professor Godfred Alufar Bokpin has warned that President Mahama’s directive to slash central government expenditure will achieve little if it fails to address the rampant financial mismanagement and wasteful spending within State-Owned Enterprises (SOEs).
Drawing a parallel to Ghana’s first president, Dr. Kwame Nkrumah’s famous assertion that Ghana’s independence would be meaningless without the liberation of Africa, Prof. Bokpin argued that cutting government spending without tackling SOE inefficiencies would be equally futile.
The University of Ghana Business School professor made these remarks in an interview with The High Street Journal, following President Mahama’s recent directive to Finance Minister Dr. Cassiel Ato Forson to “ruthlessly cut expenditure” across ministries, departments, and agencies. While the directive grants the finance minister sweeping powers to reduce government spending, Prof. Bokpin emphasized that ignoring the financial abuses within SOEs would undermine any potential savings.
“Any attempt to reduce government expenditure without addressing wasteful spending in SOEs will be an exercise in futility,” Prof. Bokpin stated. He pointed out that SOEs such as the Electricity Company of Ghana (ECG), Ghana National Petroleum Corporation (GNPC), and the National Petroleum Authority (NPA) have become hotbeds of extravagance and mismanagement. Despite their significant operational costs, many of these entities fail to deliver value, instead burdening the government and taxpayers with losses.
A recent World Bank report on Ghana’s Public Finance Review highlighted the fiscal risks posed by the operations of COCOBOD, further underscoring the need for reform. Prof. Bokpin cited examples of excessive spending within SOEs, including the appointment of multiple deputy CEOs under the previous administration, each drawing hefty salaries and benefits. “Some SOEs now have two or three deputy CEOs, all driving V8 vehicles and enjoying lavish perks. This is not sustainable,” he said.
Prof. Bokpin stressed that the waste within SOEs effectively cancels out any savings achieved through cuts to central government expenditure. He called for a lean-cost approach and greater efficiency within these enterprises, arguing that such measures could generate savings to support broader government activities. “If SOEs embrace efficiency and cost-cutting, they could contribute significantly to the national budget. Without this, the president’s directive will result in a negative-sum game,” he explained.
The economist’s concerns echo those of other analysts, including Dr. Richmond Atuahene, who have long advocated for stricter financial oversight of SOEs. Prof. Bokpin urged the government to adopt a more comprehensive approach to cost-cutting, one that includes SOEs in its scope. “The president must take a broader view of these measures. Only then will the directive have real meaning,” he said.
As calls for reform grow louder, pressure is mounting on the government to address the financial mismanagement plaguing SOEs. Prof. Bokpin’s remarks highlight the urgent need for a holistic strategy that not only reduces central government spending but also ensures that SOEs operate efficiently and transparently. Without such reforms, Ghana’s efforts to stabilize its finances and promote sustainable economic growth may fall short.
The ball is now in the government’s court to demonstrate its commitment to prudent financial management by tackling waste across all sectors, including the often-overlooked SOEs. As Prof. Bokpin aptly put it, “We cannot afford to offset savings from one area with losses in another. The time for meaningful action is now.”
