The United Nations Economic Commission for Africa (Uneca) hosted high-level discussions about tackling the growing challenges of State-owned enterprise (SOE) debt in Africa, highlighting the vital role played by SOEs in many African countries' socioeconomic performance.

Critical public services tended to deteriorate proportionately to SOEs’ financial difficulties, leading to a downward spiral of weakened service delivery and growth, Uneca Macroeconomics, Finance and Governance Division (MFGD) director Zuzana Schwidrowski said.

“SOEs play a critical role in driving national development and, while these entities have the potential to bolster economic growth and address market deficiencies, they also pose significant risks to government finances,” she said.

Poorly managed SOEs can lead to severe financial burdens, potentially destabilising national budgets and contributing to the deterioration of sovereign credit ratings.

There is a need for a multifaceted approach to address the rising SOE debt.

Financial restructuring, governance and operational improvements, and in some cases, privatisation or asset sales, were essential steps to mitigate the risks posed by SOE debt, said Uneca MFGD macroeconomic analysis section chief Lee Everts.

Corporate governance, risk management and internal oversight were important drivers of reform, she added.

“African SOEs and government finances are under pressure amid cascading crises and multiple shocks.”

The workshop discussions also focused on enhancing governance frameworks, improving financial oversight, and exploring privatisation options, said Schwidrowski.

Meanwhile, finance policymakers, industry experts and international organisations shared best practices and developed strategic solutions for effective SOE debt management during the event.

“Participants shared successful approaches to SOE debt management and identified key barriers, including challenges related to mandate delivery and the intricate links between sovereign and SOE credit ratings,” said Schwidrowski.

The Uneca-organised capacity-building workshop, held in Pretoria, Gauteng, was aimed at developing practical solutions and options for SOE debt in Africa. Finance officials from Cameroon, Ethiopia, Ghana, Nigeria, South Africa, and Zambia, along with representatives from the United Nations Development Programme, the African Forum and Network on Debt and Development, and major SOEs attended the event.

The workshop was part of a broader series of capacity-building initiatives aimed at strengthening public debt management across Africa. Uneca supported African nations in implementing innovative and robust solutions to the persistent challenges posed by SOE debt and related government liabilities, she added.