On Wednesday, Prime Minister Godwin Friday attributed the fiscal deficit of the country primarily to the “systemic failure” of State-Owned Enterprises (SOE), which he stated were unable to operate efficiently because they did not have audited financial reports; lacked forward thinking or planning; and had heavy political interference from the political directorate.
As such, many of these state owned companies have evolved from engines of economic development into non-productive organizations dependent upon continual government support to survive.
To quickly address some of the vulnerabilities associated with these state owned enterprises, the Prime Minister proposed a “People First Governance Model”, based on four significant structural changes:
Strict Accountability Requirements: The Government will require all SOEs to finalize any outstanding audits. “Those days of secret books are behind us,” said Prime Minister Friday.
Merit-Based Hiring Practices vs. Patronage-Based Management: The Administration will implement merit-based hiring requirements to remove the influence of politics within the day-to-day management of the state-owned entities, and place competent individuals at the helm of each organization (“the best mind for the job, not your buddy”).
National Budget Priorities: A comprehensive national budget review has been initiated to prioritize expenditure of funds on capital projects (critical infrastructure) that provide direct benefits to small businesses and transportation operators, while eliminating funding for underperforming SOEs.
Statutory Framework for National Budgetary Discipline: A new fiscal responsibility legislation framework has been established to govern how future national budgets will be prepared and managed. This framework will shortly be placed on a Statutory (legislative) footing requiring governments to practice fiscal discipline when preparing national budgets.
The structural reforms will be undertaken concurrently with an Emergency Tax Package (to last 90 days) to protect household income from the devastating impact of increasing global inflation rates and increased fuel prices.