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

March 18, 2022

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Torsten Wezel, and Naly Carvalho. The Financial Performance and Macrofinancial Implications of Large State-Owned Enterprises in Sub-Saharan Africa, (USA: International Monetary Fund, 2022) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Subject: Arrears, Asset and liability management, Debt sustainability, Economic sectors, External debt, Financial statements, Liquidity management, Public enterprises, Public financial management (PFM)

Keywords: Arrears, Debt sustainability, Financial statements, Firm Performance, Firms' profitability, Leverage Ratio, Liquidity management, Public enterprises, SOE debt stock sustainability, SOE debt sustainability, SOE performance, State-Owned Enterprises, Sub-Saharan Africa

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/056
Stock No:

WPIEA2022056
ISBN:

9798400202452
ISSN:

1018-5941

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