Divestiture of SOEs to be scrutinized

The Ghana Government has directed the Divestiture Implementation Committee (DIC) to look into the divestiture process of all State-owned Enterprises (SOEs) before they are wholly or jointly divested.

A minister of state and chairman of the DIC board, Mr. C.O. Nyanor ,said the order affects all the 12 SOEs currently on the fast track list, which the New Patriotic Party (NPP) administration wanted to sell out by the end of 2002.


About US$50 million was expected to be realized from the sale of the twelve companies.


According to the minister, the government is not happy about the value put on the assets by the consultants hence the new directive.


Asked whether government would contract new consultants, Mr. Nyanor said no such decision has been taken, adding, the consultants would be asked to redesign their work and present an acceptable valuation.


The divestment of government’s shares in the joint venture SOEs was expected to be completed October last year.

Barclays Bank Ghana Limited, Ghana Telecom and PSC Tema Shipyard and Drydock in which government owns 10%, 70% and 40% shares respectively are among the companies, which will float shares.


Government is to offload its 20% equity shares in Ghana Oil Palm Development (GOPD), 40% in Benso Oil Palm Plantation (BOPP), 40% Twifo Oil Palm Plantation (TOPP) and Westel 30%.


The rest are Ghana Textile Printing Company (GTP), Juapong Textiles, GAFCO and Coca Cola. Government’s shares in GTP and Juapong are 16% and 49% while it has 25% in Coca Cola.


An eventual sale of the 12 companies would bring to 168 the number of SOEs either bought or sold outright since the exercise began about 14 years ago.


The Kufuor administration, since its inception, has divested only two: Mim Timber and Kumasi Shoe Factory.

Some analysts believe that it would be difficult for government to sell these companies, arguing that companies such as Juapong Textiles, PSC Tema Shipyard and Drydock are near collapse. Perhaps, they noted, government over values most of these companies. But the board chairman argues that the exercise is not to make government rich. “We are only trying to ensure that the country’s unemployed youth get jobs and investors pay taxes to the government.”


However, stock-market equity outputs points to the divestiture of Cocoa Processing Company as an example of government’s overvaluation of the companies it puts up for sale. Initially, sold for ?1000 per share, in the face of insufficient demand for the shares by investors during the Initial Public Offer (IPO), further consultations with stockbrokers led to downward revision to ?625.


Government is hard pressed to accelerate its divestiture programme in order to bridge its financing gap. Indeed, the International Monetary Fund (IMF) has insisted on the sale of the 12 SOEs as a priority in order to support Ghana’s efforts at getting new funding from her development partners.