Ghana - State Enterprises

State enterprises

State-owned enterprises in Ghana date to the colonial period and especially to the post-World War II era. For example, the British organized a number of public utilities, such as water, electricity, postal and telegraph services, rail and road networks, and bus services. To foster exports of coffee, palm kernels, and cocoa, the Agricultural Produce Marketing Board was founded in 1949. In addition, the colonial government established the Industrial Development Corporation and the Agricultural Development Corporation to promote industries and agriculture. In the mid1970s , the National Redemption Council under I. K. Acheampong also emphasized state enterprises. The Acheampong government established a number of new enterprises and partly or wholly nationalized a number of foreign-owned companies, including the Ashanti Goldfields Corporation and Consolidated African Selection Trust. Intermittent efforts to improve performance and efficiency often led to the transferral of duties and functions to alternative state bodies but not to the wholesale privatization of ownership rights and assets.

By the 1980s, state enterprises were suffering along with most businesses in Ghana, but they were also held to blame for the economy's general condition. In particular, many were heavily subsidized and were draining much of the country's domestic loan capital. Under pressure from the World Bank and in accordance with the principles of the ERP, in 1984 the government began to sell state enterprises to private investors, and it initiated the StateOwned Enterprise Reform Program in 1988.

In 1984 there were 235 state enterprises in Ghana. The government announced that twenty-two sensitive enterprises would not be sold, including major utilities as well as transport, cocoa, and mining enterprises. In 1988 thirty-two were put up for sale, followed by a further forty-four in 1990 under what was termed the Divestiture Implementation Committee. By December 1990, thirty-four enterprises had been either partially or totally divested. Four were sold outright, a further eight were partially sold through share issues, and twenty-two were liquidated. Divestiture of fifteen additional enterprises was also underway, and by 1992 plans were afoot to privatize some of the nation's banks.

Joint ventures were set up for four enterprises, including two state mining companies, Prestea Goldfields and Ghana Consolidated Diamonds. In 1992 the Divestiture Implementation Committee considered resource-pooling programs to enable smaller domestic investors to buy up state enterprises. Such pooling would accelerate the program, but more importantly, it would enable the Provisional National Defence Council (PNDC) to deflect charges that it was auctioning off the nation's assets to foreigners.

The government also introduced a performance monitoring and evaluation system to improve state enterprise productivity and efficiency as well as to provide incentives for strong performers and disincentives for weak performers. By 1989 fifteen enterprises had responded positively, turning a combined pre-tax loss of �418 million from the previous year into pre-tax profits of �19 billion, following a 9 percent cut in costs and a 30 percent increase in sales. In early 1992, the chairman of the State Enterprises Commission announced that the government would pass legislation requiring state-owned enterprises to register as limited liability companies by 1993 to stimulate competition and to improve their performances.

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Ghana's state-owned enterprises: To privatise or not to