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      Fixed assets are the backbone of businesses across the globe, serving as critical resources for operations, production, and service delivery. In Ghana, the significance of fixed assets is evident in the financial statements of companies listed on the Ghana Stock Exchange (GSE). Collectively, these companies report total assets valued at approximately GHS 1.79 billion, with fixed assets accounting for GHS 456 million, representing 25% of total assets. This emphasises how essential fixed assets are in driving business operations and contributing to value creation.

      Reindolf Annor

      When analysed by industry, the reliance on fixed assets varies significantly. Manufacturing leads with a fixed asset-to-total-assets ratio of 85%, reflecting its asset-intensive nature, followed by Pharmaceuticals (60%) and Mining (53%).

      Telecommunication, Real Estate, and Oil & Gas also exhibit substantial reliance, with ratios of 47%, 46%, and 36% respectively.

      In contrast, Banking and Insurance demonstrate a lower ratio of 5%, indicative of their capital allocation to financial instruments rather than physical assets. Despite the significant role fixed assets play in organisational success, many businesses struggle to manage them effectively. 

      gh-coleman-joyceline
      Joyceline Coleman

      Partner, Advisory

      KPMG in Ghana

      gh-reindolf-siaw-annor
      Reindolf Annor

      Partner - Accounting Advisory Services

      KPMG in Ghana

      For Ghanaian businesses specifically, the challenges of fixed asset management can be categorised into three key areas:
      Asset Management Framework
      Absence of an established Asset Management (AM) framework

      In the absence of a clear AM framework, companies often operate without a strategic direction for managing their assets. This leads to a misalignment between the organisation’s goals and how assets are managed which creates inefficiencies in decision-making, resource allocation, and long-term asset planning.

      Operational Procedures
      Weak Operational Procedures

      Inadequate procedures for acquiring, tracking, maintaining, and disposing of fixed assets expose businesses to operational lapses. This results in inefficiencies, such as delays in asset acquisition, inaccurate asset tracking, and inconsistent maintenance schedules. These gaps not only hinder efficiency but also limit the ability to optimise asset performance throughout their lifecycle.

      Roles and Responsibilities
      Undefined roles and responsibilities for fixed asset management

      When roles and responsibilities for fixed asset management are unclear, accountability is diluted. This often results in neglected assets, poor maintenance and disposal, and a lack of alignment between operational goals and asset strategies. 

      Asset Management Framework

      Absence of an established Asset Management (AM) framework

      In the absence of a clear AM framework, companies often operate without a strategic direction for managing their assets. This leads to a misalignment between the organisation’s goals and how assets are managed which creates inefficiencies in decision-making, resource allocation, and long-term asset planning.

      Operational Procedures

      Weak Operational Procedures

      Inadequate procedures for acquiring, tracking, maintaining, and disposing of fixed assets expose businesses to operational lapses. This results in inefficiencies, such as delays in asset acquisition, inaccurate asset tracking, and inconsistent maintenance schedules. These gaps not only hinder efficiency but also limit the ability to optimise asset performance throughout their lifecycle.

      Roles and Responsibilities

      Undefined roles and responsibilities for fixed asset management

      When roles and responsibilities for fixed asset management are unclear, accountability is diluted. This often results in neglected assets, poor maintenance and disposal, and a lack of alignment between operational goals and asset strategies. 

      This article delves into these challenges, offering insights and strategies to help organisations optimise their fixed asset management practices, unlock value and ensure sustainable success.

      How can robust asset management practices add value to your organisation?

      Effective asset management involves more than just keeping records; it creates a culture of transparency and accountability. With a clear view of asset locations, conditions and utilisation, organizations can optimize resource allocation, directing funds and personnel to where they’re most needed rather than wasting them on inefficiencies or redundancies.  Maintenance practices also become streamlined, shifting from reactive fixes to proactive schedules that extend asset life and reduce unexpected downtime.

      Ultimately, these improvements translate into significant cost savings, slashing both operational expenditure (OPEX) by minimizing inefficiencies and capital expenditure (CAPEX) by avoiding premature replacements or over-investments.

      Driving value through effective fixed asset management

      Driving value through effective fixed asset management

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