The Financial Performance and Macrofinancial Implications of Large State-Owned Enterprises in Sub-Saharan Africa

The Financial Performance and Macrofinancial Implications of Large State-Owned Enterprises in Sub-Saharan Africa
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Volume/Issue: Volume 2022 Issue 056
Publication date: March 2022
ISBN: 9798400207310
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Exports and Imports , Finance , Economics- Macroeconomics , Economics / General , Firm Performance , State-Owned Enterprises , Sub-Saharan Africa , SOE debt stock sustainability , SOE debt sustainability , leverage Ratio , SOE performance , firms' profitability , Public enterprises , Debt sustainability , Liquidity management , Financial statements , Arrears ,

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August 2009 Working Papers
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March 2010
Summary

Using a newly-compiled dataset of state-owned enterprises in Sub-Saharan Africa, we present aggregate information about profitability, liquidity and leverage. We find that 40 percent of the close to 300 surveyed SOEs are unprofitable, while larger firms also tend to be illiquid and overleveraged. In cross-sectional regressions we find that SOE debt stock sustainability is impacted by firms’ profitability and liquidity, while macroeconomic factors cannot be shown to matter, expect for some governance variables. Based on these findings and citing country examples, we also illustrate that weak SOE performance may have a macrofinancial impact affecting bank soundness through delinquent loan exposures.

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