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

_IMF Working Papers, March 18, 2022_

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## Bibliographic details
- Authors: Torsten Wezel, Naly Carvalho
- Published: March 18, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400202452.001

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### Overview
- Authors: Torsten Wezel, Naly Carvalho
- Publication date: March 18, 2022
- Series: Working Paper No. 2022/056
- Pages: 32
- DOI: https://doi.org/10.5089/9798400202452.001

### Key empirical findings
- Using a newly-compiled dataset of state-owned enterprises (SOEs) in Sub-Saharan Africa, the study presents aggregate information about profitability, liquidity and leverage.
- 40 percent of the close to 300 surveyed SOEs are unprofitable.
- Larger firms also tend to be illiquid and overleveraged.
- Cross-sectional regressions find that SOE debt stock sustainability is impacted by firms’ profitability and liquidity.
- Macroeconomic factors cannot be shown to matter for SOE debt stock sustainability, except for some governance variables.
- Weak SOE performance may have a macrofinancial impact affecting bank soundness through delinquent loan exposures.

### Subjects and keywords (as provided)
- 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

### Analytical implications
- Profitability and liquidity at the firm level are key determinants of SOE debt sustainability in the sample.
- Governance variables show some measurable relationship with debt sustainability, whereas broad macroeconomic variables do not in the reported regressions.
- The combination of unprofitability, illiquidity, and overleverage among larger SOEs implies potential spillovers to the banking sector via delinquent loan exposures.

*IMF Working Paper by Torsten Wezel and Naly Carvalho (Working Paper No. 2022/056, March 18, 2022).*

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_Source: https://www.imf.org/en/publications/wp/issues/2022/03/18/the-financial-performance-and-macrofinancial-implications-of-large-state-owned-enterprises-514063_