No profit, no bonus: A turning point in public sector governance

By Nana Sifa Twum, PhD

Ghana’s public sector governance is at an inflection point. A recent directive by Thomas Ampem Nyarko, warning board chairpersons and Chief Executive Officers of State-Owned Enterprises (SOEs) not to pay themselves bonuses while declaring losses, has struck a powerful chord across the country. It is a statement that resonates not only as a fiscal policy measure but as a moral correction in the management of public institutions.

At its core, the directive is simple: loss-making institutions cannot justify reward systems that suggest success. Yet, its implications are far-reaching.

For years, Ghana’s SOEs have operated within a paradoxical framework, persistent financial underperformance coexisting with generous executive compensation. This contradiction has not only eroded public trust but has also imposed a silent burden on the national economy.

The intervention, coming under the broader leadership of John Dramani Mahama, signals a deliberate shift in governance philosophy. It represents a move away from entitlement and toward accountability, from institutional complacency to performance-driven management.

The Culture of Rewarding Failure

The issue the Deputy Minister has confronted is not new. Many SOEs in Ghana have, over the years, recorded consistent losses while maintaining robust compensation structures for their top management. Bonuses, allowances, and other incentives have often been treated as standard entitlements rather than performance-based rewards.

This culture has created a dangerous precedent. When leadership is insulated from the consequences of poor performance, inefficiency becomes normalised. Decision-making weakens, innovation declines, and accountability fades.

Ultimately, the institution drifts further from its mandate, while the cost of its inefficiency is transferred to the state—and by extension, the taxpayer. The directive, therefore, challenges a deeply entrenched system. It asks a fundamental question: Should public institutions reward themselves for failure?

The Economic Context

Ghana’s fiscal environment makes this directive even more critical. Many SOEs depend heavily on government subventions, guarantees, or periodic bailouts to stay afloat. In effect, losses incurred by these entities are often absorbed by the national budget.

In such a context, paying bonuses in loss-making institutions is not merely a governance issue, it is a fiscal injustice. It diverts scarce public resources toward private gain, undermining efforts to stabilise the economy and fund essential services such as healthcare, education, and infrastructure.

By linking bonuses to profitability, the government is introducing a principle that is standard in the private sector but has been inconsistently applied in public enterprises, performance must precede reward.

Governance Reform in Motion

The directive also aligns with ongoing reforms spearheaded by institutions such as the State Interests and Governance Authority, which has been working to strengthen oversight and improve the performance of state enterprises.

One of the key challenges in SOE governance has been the lack of clear performance benchmarks. Without measurable targets, it becomes difficult to assess whether management has succeeded or failed. This ambiguity has allowed compensation decisions to be made without a strong link to outcomes. The “no profit, no bonus” stance introduces clarity. It establishes a baseline expectation: financial sustainability is not optional. It is a minimum requirement for leadership legitimacy.

Moreover, it signals a shift toward performance-based contracts, in which CEOs and boards are evaluated against clearly defined indicators. This is a critical step in transforming SOEs from administrative entities into commercially viable organisations.

Beyond Finance: A Moral Argument

While the economic rationale for the directive is clear, its moral dimension is equally compelling. Public institutions exist to serve the people. Their resources are derived from citizens’ collective contributions. As such, their management carries a fiduciary responsibility that goes beyond profit and loss statements.

When an SOE records losses yet rewards its leadership, it sends a troubling message: that public accountability is secondary to personal benefit. This erodes trust in institutions and weakens the social contract between government and citizens.

The Deputy Minister’s warning, therefore, is not just about money. It is about restoring integrity in public service. It is about affirming that leadership in public institutions is a privilege that comes with responsibility, not entitlement.

The Implementation Challenge

However, policy declarations are only as effective as their implementation. Enforcing the “no profit, no bonus” directive will require more than public statements. It will demand robust monitoring systems, transparent reporting mechanisms, and the political will to sanction non-compliance.

There is also the question of defining “profit” in the context of SOEs. Some state enterprises have social mandates that may not always align with strict profitability. For such institutions, performance metrics must be carefully designed to reflect both financial sustainability and social impact.

Additionally, there may be resistance from within the system. Long-standing practices do not disappear overnight, and those who benefit from the status quo may seek to circumvent or dilute the directive. Addressing this will require strong institutional backing and consistent enforcement.

A Signal to the Future

Despite these challenges, the directive represents a critical turning point. It sends a clear signal that Ghana is serious about reforming its public sector. It aligns with broader efforts to enhance transparency, improve efficiency, and reduce waste.

More importantly, it sets a precedent. If successfully implemented, it could redefine how public institutions are managed, not only in Ghana but across the region. It could inspire a new standard where accountability is not negotiable, and where leadership is measured by results rather than rhetoric.

From Entitlement to Accountability

The warning issued by Deputy Minister Thomas Ampem Nyarko is both timely and necessary. It confronts a long-standing anomaly in Ghana’s public sector and offers a pathway toward more responsible governance.

But beyond the policy itself lies a deeper transformation. This is about changing mindsets. It is about moving from a culture where public office is seen as an avenue for personal gain to one where it is understood as a platform for service and impact.

In the final analysis, the principle is clear and compelling:

Public institutions cannot afford to reward failure.

If Ghana is to build a resilient and accountable public sector, then performance must be the currency of reward. Anything less is not just inefficient- it is unjust.

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