MONROVIA: The World Bank (WB) has disclosed that reforms of State-Owned Enterprises (SOEs) Sector in Liberia initiated in 2005 have yet to translate into improved SOE performance.
According to the bank, Performance Management System for SOEs in Liberia are “currently weak or non-existent,” in some SOEs.
The findings were contained in the World Bank- IDA report styled: “Liberia: Improving Governance of State-Owned Enterprises and Reducing The Fiscal Risks.”
According to the World Bank, most of the 61 SOEs, spread over several sectors, were dormant throughout the Liberian civil war.
As such, efforts to improve the governance framework under the BSE form part of the strategy to enable the SOEs improve their performance.
The report that this is currently one of the core functions of the BSE, which it shares with other institutions with the same responsibility, including the SOES themselves.
The World Bank, in the report indicated that the SOE sector of Liberia “poses a significant fiscal risk without sufficient oversight.”
Accordingly, the bank said, its review found that the SOEs need to perform better against the annual budget expectations regarding their net revenue generation and profitability.
According to the latest report, which is in line with Governance Global Practice -West and Central African Region, the SOEs in Liberia collectively lost US$7.4. million in Q1 2022 despite the budget’s projection that the sector would generate a US$14.6 million profit for 2022.
The first quarter of 2022 balance sheet shows total non-current liabilities of US$574.3 million against total liabilities and equity of US$993 million.
Fiscal risks arise from implicit and explicit contingent liabilities from SOE operations.
On the other hand, the report pointed out that the SOEs must carry out a mix of non-commercial public service activities for which they are not explicitly compensated.
Additionally, the report indicated that most SOES report their financial information to the BSE late, affecting the Finance Ministry’s oversight function and the BSE’s role in managing and reporting on fiscal risks associated with SOEs.
Giving an overview of the SOES sector, the report asserted that the aggregate gross operating revenue generated by the 15 entities (out of 46 active4 SOES) that submitted reports for Q1 FY2022 was approximately US$40 million, representing 16 percent of the SOE sector’s aggregate annual target.
This is up by three percent when compared to actual performance for the same period in FY2021.
According to the World Bank, compared to FY2021, the total assets of the SOE portfolio under review grew by two percent from US$978.25 million in FY20231 to US$993.07 million in 2022. Non-current assets accounted for US$802.28 million or 81 percent of the total asset value at the end of March 2022.
Total liabilities declined by two percent from US$750.48 million in FY2021 to US$735.47 million.
Of the total liabilities, 25 percent were short-term, and 75 percent were long term.
The portfolio’s net worth under review went up 13 from US$227.77 million in 2021 to US$257.61 million at the end of March 2022.
The report added that at the end of the quarter under review, the Liberian Government’s total commitment to the sector amounted to US$443.18 million, comprising total subsidies of US$2.72 million, total outstanding on-lent loans and Government -guaranteed loans of US$432.45 million, and other Government-backed debts of US$8.01 million.
Touching on subsidies, the report revealed that for the 2022 fiscal year, the Government budgeted subsidies of US$49.69 million for the 11 subsidized SOEs, a 469 percent increase from the US$5.22 million budgeted in 2021.
The total amount released to the sector for Q1of 2022 was US$2.50. compared to US$3.76 million released for the same period in FY2021.
It may be recalled that Bureau of State Enterprises (BSE), was established in 1985 by the Government of Liberia to coordinate the activities of all State-Owned Enterprises (SOEs).
Currently headed by Mr. Arthur S. Massaquoi as Director General, the BSE’s coordination of the state enterprises sector involves oversight of SOEs operation, professional advice to the Government on issues relating to the state enterprise sector, regulation of the sector through the recommendation of policy options, and providing strategic leadership and direction.
