The effect of government intervention on management decisions in state owned enterprises (P&T Corporation, a Case Study)

Goods and Services are public goods which the price mechanism failed to provide. Due to this gap, there was the need to establish State Owned Enterprise (SOEs). Some of the reasons for establishing the State Owned Enterprises was that, some of the public goods and services needed huge capital outlay to establish them, which the private entrepreneurs did not have. Even if they had, they were not prepared to embark upon. Other reasons were that, some of them needed monopoly, like water and electricity; some were for import substitution strategy like the GIHOC group of companies. It meant that, they were to operate on Private Business principles, but that was not to be. There was too much interference from the government. Governments used the State Enterprises for their own political agenda; they made the Enterprises priced their goods and services below cost without adequate or corresponding grant to compensate for loss of revenue. There was withdrawal of grants to the State Owned Enterprises, but they were not allowed to control their own prices. Moreover, the goods and services that the government bought from the State Own Enterprise were not paid for. They were therefore incurring cost for providing these services but were not getting returns. Government sent conflicting policy signals to the State Owned Enterprises which sometimes confused them. It also interrupted in decision making process of these enterprises and encouraged political activists in the State Owned Enterprises, especially those who were vocal. For these reasons, the State Enterprises began making losses and could not finance government institutions. Workers were sacked and some of the State Owned Enterprises could not pay their workers. Most of them had to be closed down, and a lot more had to be put on divestiture. It is in this connection that this research examines some of the Government intervention in State Owned Enterprises and their effects and why most of these Enterprises collapsed. There was withdrawal of grants to the State Owned Enterprises, but they were not allowed to control their own prices. Moreover, the goods and services that the government bought from the State Own Enterprise were not paid for. They were therefore incurring cost for providing these services but were not getting returns. Government sent conflicting policy signals to be State Owned Enterprises which sometimes confused them. It also interrupted in decision making process of these enterprises and encouraged political activists in the State Owned Enterprises, especially those who were vocal. For these reasons, the State Enterprises began making losses and could not finance government institutions. Workers were sacked and some of the State Owned Enterprises could not pay their workers. Most of them had to be closed down, and a lot more had to be put on divestiture. It is in this connection that this research examines some of the Government intervention in State Owned Enterprises and their effects and why most of these Enterprises collapsed. The research takes a critical analysis of these interventions with regards to the Ghana Post and what needs to be done. Attempted solution has been discussed. It is my fervent hope that the conclusion and recommendations of this work will help in injecting greater efficiency in the operations of State Enterprises and also help in streamlining the managing of these enterprises. At least those that have not been sold I wish to state, however, that all matters of analysis, interpretations, opinions, errors, commissions and omissions are entirely my own responsibility.

Source: KNUST