Founder and Senior Partner at AB and David Law firm, David Ofosu-Dorte, has advised government to allow State-Owned Enterprises to operate as commercial entities.

The Corporate Lawyer asserted that this is the best way to make the public sector attractive and also enable it to thrive.

Speaking on Joy FM‘s Super Morning Show, he challenged the long-standing assertion that state-owned enterprises should operate on non-profitable basis, adding that “if SOEs are run very well, the state will generate so much dividends for the state that we may not need to borrow.”

“I don’t believe in the statement that the government has no business doing business. Government has a business in doing business but the government must do business as a business, not as government. I don’t define the private sector as businesses that are owned by the private sector, but as businesses that are run on commercially sound principles,” he added.

He contended that any “private sector that does not run their business on commercially sound principles is worse than being in the public sector.” Likewise, if the public sector also operates on sound commercial principles, it will also thrive well.

He cited China, for instance, and said though 90% of the Chinese entities which have helped develop the country are owned by the state, they are operated as if they are private and urged the government to minimise its interference in the day-to-day decision-making activities of SOEs to address the annual losses they post.

“I think there are two things we need to do; to create a proper culture of businesses thriving as businesses and government must be the driver and drive things well.

“For the state to let things run commercial, they just have to run as commercial – you should not interfere. You appoint a board and leave them to run and give benchmarks. If they fail to attain the benchmark, you’re fired. The state should act as shareholders,” he stressed.

He further called on the government to invest in the private sector which is believed to be the engine that drives growth in every economy. Though he agrees with this assertion, he said the private sector will not thrive without the support of the government.

“I think the Private Sector is more than the engine of growth. I think it’s the entire vehicle including the wheels and the government is the driver. Once the driver gets it right, the vehicle would perform. If every now and then there are faults with the vehicle the driver takes it to the mechanic and it gets fixed. So even though the private sector is the entire vehicle, the real trigger is the driver who has the ability to turn on the engine and move.

“We also need to move away from the belief that Foreign Direct Investment is the only way of driving investment. In fact, promoting local investments is a faster way of driving foreign investment.

“We need to have a situation where the government drives a sense of growth in the private sector so that the private sector will cure that culture which is the mindset of wanting to own 100% of one instead of 10% of 100,” he stated.