SOEs Critical for Economic Growth -World Bank Manager Calls for Robust Governance Mechanisms

MONROVIA: Most agencies of the Government of Liberia if not all whose fiduciary responsibilities border on trade and commerce have long been ironically dependent and parasitic on state budget for their survival. Where they are relatively independent in terms of revenue, there contribution to the national envelop is inconsequential, and experts believe mismanagement and graft are to blame for losing their pivotal place in underpinning and spurring growth and prosperity. Steady efforts are on the way to change the sad narrative, and the World Bank Ground is amongst the changemakers in the Liberian SOEs sector, bringing to bear need to infuse improved skillsets and knowledgebase through training and commitment to transparency and accountability. As The Analyst reports, the Country Manager of the Bank in Liberia has been accentuating the importance of these critical government institutions but warns that all efforts must not be without robust governance mechanisms.

The World Bank Liberia Country Manager in Liberia, Georgia Wallen, says state-owned enterprises (SOEs) play a pivotal role in many economies around the globe, serving as engines of growth, providers of essential services, and catalysts for development. She however pointed out that their potential can only be fully realized when accompanied by robust governance mechanisms that prioritize transparency, accountability, and efficiency.

Ms. Wallen was addressing a day-long dissemination workshop on a new report released by the World Bank – Improving Governance of State-Owned Enterprises and Reducing Fiscal Risks, with theme: “Navigating the Path to Sustainable State-Owned Enterprises.” The workshop, held on Tuesday, May 28, served as a vital platform for presenting the report’s findings and recommendations to relevant stakeholders, including government officials, policymakers, regulators, and SOEs representatives.

The World Bank Liberia Country Manager said the new report also underscores the importance of enhancing governance frameworks within SOEs to mitigate fiscal risks and promote sustainability. Ms. Wallen highlighted four key strategies outlined in the report:

  • Transparency and Accountability: Transparency should be the cornerstone of SOE operations, ensuring that decision-making processes are clear and accessible to stakeholders.
  • Strategic Planning and Performance Management: SOEs should have a clear vision aligned with national development goals. Comprehensive performance management systems are needed to monitor progress; identify areas for improvement; and drive efficiency and innovation.
  • Corporate Governance Reforms: Strengthening corporate governance frameworks is essential to instill confidence among investors, creditors, and the public in SOEs. This includes establishing independent boards of directors; adopting best practices in risk management; and fostering a culture of integrity and ethical conduct.
  • Financial Sustainability: SOEs need to be financially sustainable to fulfill their mandate effectively without burdening the public purse. This requires prudent financial management practices – including effective budgeting, debt management, and revenue optimization strategies.

 “Collaboration between governments, international organizations, and the private sector will be paramount as Liberia navigates the path to sustainable SOEs,” the World Bank Country Manager said. She added that together, “we can leverage our collective expertise to implement needed reforms and build a more resilient and prosperous future.”

Also addressing the workshop, the World Bank Senior Financial Management Specialist, Macdonald Nyazvigo, who led the team that prepared the report, said the report is significant in Liberia’s economic governance and risk management. “State-owned enterprises (SOEs) often play a pivotal role in a country’s economy, representing substantial assets and liabilities. Therefore, ensuring effective governance of these entities is crucial for economic stability and sustainable development,” he emphasized.

The report, Mr. Nyazvigo added, provides insights into best practices, policy recommendations, and strategies to enhance the governance framework surrounding SOEs. “By identifying key areas for improvement and offering actionable recommendations, the report aims to mitigate fiscal risks associated with SOEs, such as inefficient resource allocation, financial mismanagement, and fraud & corruption,” he pointed out.

This workshop facilitated knowledge sharing, fostered dialogue, and encouraged collaborative efforts to address governance challenges in SOEs. Additionally, it allowed stakeholders to discuss implementation strategies, potential barriers, and the necessary institutional reforms needed to enhance SOE governance effectively. It was attended by Board Chairpersons, Chief Executive Officers, and Chief Finance Officers of some of Liberia’s large SOEs. Present also were senior officials of various ministries and Senior Presidential Advisor Dr. Augustine Konneh.

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