Business case for regulations for government-owned enterprises

As required under Sections 7 and 9 of the Government Owned Enterprises Act (GOEA,2015), a GOE shall operate on commercial principals for profit, be self-financing and self-sustaining and with a defined income stream.

Effective, efficient and agile management of direct purchases shall be one of key enablers for the realisation of the above requirements.

However, the Public Procurement and Assets Disposal Act and its attendant regulations are largely intended for indirect purchase. They not suitable for direct purchases.

For such entities to sustain themselves in their respective and highly competitive business environments and enable their stakeholders make a commensurate return on their investment as required under Section 27(3) of the Act, there is need to develop enabling procurement regulations, specifically for their direct purchases.

A number of Government Owned Enterprises have long lamented how they have been losing huge business opportunities to their competitors on account of procurement operational impediments – and which their private sector counterparts are not subjected to.

In the official Guidelines on Management of State Corporations issued by the Chief of Staff and Head of Public Service in May 2024, it was reported that 33 of the 79 GOEs listed under Appendix II made losses in the previous three financial years.

Twenty four broke even over the same period. This means that only 22 GOEs made profit.

As a result, and for many years, such GOEs have been relying on the Exchequer for survival, which beats the purpose for their existence.