Mr Speaker, I beg to support the Motion and in doing so, I present your Committee's Report.
The State Interests and Governance Authority Bill, 2019 was first presented to Parliament and read the first time on 8th March, 2019.
Mr Speaker referred the Bill to the Finance Committee for consideration and report in accordance with the 1992 Constitution and the Standing Orders of Parliament.
The Committee met with the Deputy Ministers for Finance, Hon Kwaku Kwarteng and Hon Abena Osei-Asare, and officials from the Ministry of Finance, the Attorney- General's Department and the State Enterprises Commission.
Documents Referred to
The Committee referred to the following documents in order to consider the Bill:
1. The 1992 Constitution;
2. The State Enterprises Commission Act, 1987
3. The Divestiture of State Interests (Implementations) Act, 1993 (PNDCL326); and
4. The Standing Orders of Parliament.
Since 1959 Ghana's legal framework which governs state- owned enterprises has undergone extensive reforms in pursuit of making these enterprises effective and more relevant within the economic development agenda.
Despite these reforms, the performance of state-owned enter- prises has been constrained by issues of liquidity, capitalisation and indebtedness, compounded by poor governance practices and perceived fragmented oversight by the multiplicity of other government organisations.
Throughout the years, many of the state-owned enterprises have con- sistently underperformed regarding their objectives, while others continue to incur losses.
At the behest of Government, the World Bank carried out an assessment of the corporate governance framework of the state- owned enterprises sector from 2013 to 2015. The assessment sought to
identify the core issues facing the state-owned enterprises in terms of the existing governance and oversight arrangements.
The assessment which focused on thirty-nine (39) wholly-owned state- owned enterprises, revealed an aggregate loss of approximately fifteen million Ghana cedis (GH¢ 15 million) as at the end of the 2012 financial year.
The study further noted that, the uncoordinated oversight of state- owned enterprises by different Government institutions and a lack of clearly defined ownership frame- works accounted for the poor performance of state-owned enterprises.
Another review carried out on four financial and economic regulators and a Trust also revealed that these entities suffered from identical corporate governance challenges mainly in the arrears of transparency and accountability.
It was noted that Government should, therefore, be equally concerned with ensuring good corporate governance of other State entities, especially in view of the role they play within the economy, and shaping industries for development.
Currently, Government has further varying equity interests in over eighty companies, comprising wholly-owned state-owned enterprises and joint venture companies. Majority of the state-owned enterprises operate in critical sectors of the economy
providing vital services, products and employment. They are also important to the management of public finances and more broadly, public policy.
The assessment carried out by the World Bank estimated that the state- owned enterprises sector accounted for about 13 per cent (13%) of the country's Gross Domestic Product (GDP) as at 2012 as well as two per cent (2%) of formal employment.
It is important to underscore that, various reforms have been undertaken over the years to ensure that the interests of the State in these companies are managed prudently.
The legacy debts from the energy sector present a practical example of the huge fiscal burden placed on Government to safeguard the sustainability of the state-owned enterprises and joint venture companies for the public good.
A report on the aggregate performance of state-owned enterprises further reveals that the sector recorded a significant net loss of approximately 1.39 billion Ghana cedis at the end of the 2016 financial year.
In terms of returns on investments made by Government in these entities, available data on dividend payments reveal that only nine companies comprising two state-owned enterprises and seven joint venture companies paid dividends in 2017.
To date, none of Government's interventions to institutionalise effective and efficient oversight mechanisms in State entities has yielded results.
Moreover, the existing oversight framework where the Ministry of Finance, the Sector Ministries, the State Enterprises Commission, the Controller and Accountant-General's Department and the Divestiture Implementation Committee, among others, play various oversight roles, makes it difficult for Government to effectively manage and monitor the affairs of state-owned enterprises and joint venture companies in which the state has interests.
In response to the foregoing concerns, Government intends to adopt the model of a single entity to improve the existing legal framework for state-owned enterprises and other entities in which the State has an interest.
This approach will enable Government harmonise guidelines and policies to oversee and administer the interests of the State held by state- owned enterprises, joint venture companies and other entities in which the State has an interest and establish an efficient corporate governance regime applicable to all the entities.
Streamlining the existing oversight roles under the cover of a single entity will ensure that different Government institutions such as the Sector Ministries of the various state-owned enterprises, the Ministry of Finance and the State Enterprises Commission do not give conflicting or overlapping directives to state-owned enterprises.
By extension, the oversight of interests of State entities including regulatory bodies, is also intended to increase the accountability of these State entities exponentially in terms of transparency, accountability and reporting.
The establishment of a single entity by an Act of Parliament will enhance co-ordination of the management of State interests and ensure clear lines of accountability from state-owned enterprises, joint venture companies and other State entities to the Government.
Other benefits include stronger fiscal risk management through the systematic monitoring, identification, assessment and mitigation of potential fiscal risks from state-owned enterprises and other State entities.
Invariably, the oversight and gover- nance would boost performance or profitability of the entities and ultimately lead to increase returns to the State in the form of dividends or surpluses.
Object of the Bill
The purpose of the Bill is to establish a State Interest and Governance Authority to oversee and administer the State's interests in state-owned enterprises, joint venture companies and other entities in which the State has an interest and further, to ensure that these entities adhere to good corporate practices to promote growth of industry and commerce.
Structure of the Bill
The Bill is divided into thirty-eight (38) clauses.
Clause 1 of the Bill deals with the application of the Bill and indicates the specified entities to which the Bill applies, namely state-owned enterprises, joint venture companies and any other entity in which the State has an interest.
Clauses 2 to 4 provides for the establishment of the State Interests and Governance Authority. Clause 2 establishes the Authority as a body corporate with perpetual succession.
The objects of the Authority are specified in clause 3 to include the promotion of efficient or profitable operations of specific entities; ensuring that specified entities adhere to good corporate governance practices; and overseeing the interests of the State in the specified entities.
The functions of the Authority which emanate from the objects of the Authority, are provided for in clause
Clause 5 provides for the governing body of the Authority. The members of the Board are to be appointed by the President in accordance with article 70 of the Constitution.
Clause 6 enumerates the functions of the Board. The Board is responsible for the strategic direction and policies of the Authority as well as the promotion and enforcement of a Code of Corporate Governance that sets out the principles and