Addis, Ababa: To address the increasing challenges of State-Owned Enterprise (SOE) debt in Africa, the United Nations Economic Commission for Africa (ECA) held a high-level workshop in Pretoria from 21 to 23 August 2024. The event gathered finance policymakers, industry experts, and international organizations to exchange best practices and develop strategies for effective SOE debt management across the continent.

Attendees included officials from the Ministries of Finance of Cameroon, Ethiopia, Ghana, Nigeria, South Africa, and Zambia, along with representatives from UNDP, the African Forum and Network on Debt and Development, and major state-owned entities. The workshop focused on strengthening governance frameworks, enhancing financial oversight, and exploring privatization options.

The discussions emphasized the significant role SOEs play in national development. While these entities have the potential to drive economic growth and address market deficiencies, they also present considerable risks to government finances. The workshop highlighted that mismanaged SOEs can create substantial financial burdens, potentially destabilizing national budgets and negatively impacting sovereign credit ratings.

Zuzana Schwidrowski, Director of the Macroeconomics, Finance, and Governance Division (MFGD) at ECA, noted in her opening remarks, SOEs play a crucial socio-economic role in many African countries. This workshop is timely for Africa’s development, as both SOE and government finances are under strain due to ongoing crises and multiple shocks.

Schwidrowski also pointed out that the financial difficulties of SOEs often lead to deteriorating public services, creating a cycle of weakened service delivery and reduced growth. She emphasized the importance of this workshop in developing practical solutions for Africa.

Participants highlighted the need for robust corporate governance, risk management, and internal oversight as key drivers of reform. They shared successful strategies for managing SOE debt and identified key challenges, including issues related to mandate delivery and the complex relationship between sovereign and SOE credit ratings.

Lee Everts, Chief of the Macroeconomic Analysis Section in MFGD, stressed the importance of a comprehensive approach to addressing the growing SOE debt. Financial restructuring, governance and operational improvements, and in some cases, privatization or asset sales, are critical to reducing the risks associated with SOE debt, she said.

This workshop, organized by ECA's Macroeconomics, Finance, and Governance Division in partnership with its Sub-Regional Office for Southern Africa, is part of a broader series of capacity-building efforts aimed at enhancing public debt management across Africa. ECA remains committed to helping African nations implement innovative and effective solutions to the ongoing challenges posed by SOE debt and related government liabilities.