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

This working paper examines the financial performance and macroeconomic implications of large state-owned enterprises (SOEs) in Sub-Saharan Africa. The authors use a newly compiled dataset to provide aggregate information on profitability, liquidity, and leverage for close to 300 surveyed SOEs. They find that 40% of the surveyed SOEs are unprofitable, and larger firms tend to be illiquid and overleveraged. Cross-sectional regressions show that SOE debt stock sustainability is impacted by firms' profitability and liquidity, while macroeconomic factors do not appear to matter. The authors also illustrate that weak SOE performance can have a macrofinancial impact on bank soundness through delinquent loan exposures. The paper is published to elicit comments and encourage debate, and the views expressed are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.