In the Public Interest

Less state involvement means more employment

Ghana's privatisation programme - although far from complete - has had the effect of generating greater employment rather than reducing it, says Emmanuel Agbodo, the executive secretary of the state body responsible for the transfer of Government-owned enterprises to the private sector.

There tends to be, he admits, an initial period of restructuring when many of the existing personnel are laid off, but this soon changes once the newly privatised companies begin operating and making the kind of capital investments that were beyond the resources of the state.

Since the privatisation programme began in 1989, 132 state-owned enterprises have been sold off to become 232 privately owned companies. There are a further 168 scheduled. Those already processed have come from the mining, agriculture, telecommunications, road transport and tourism sectors.

It has had a profound change in a country where there has been state involvement in almost all industrial and commercial activity.

The key purpose is to reduce the burden on the public purse caused by loss-making enterprises. It has not been an easy exercise. Some of the state-owned enterprises have been effectively inactive, others have had assets - or lack of assets - problems.

Sales have taken place through competitive tender, creation of joint venture companies and the offer of shares to the public. The Government has also granted concessions to operators, in the case of Ghana Railways Corporation, and leased operational units of the Ports and Harbours Authority.

Ashanti Goldfields sale raised $400 million
for the Government

The committee would like to see more public flotations as vehicles for the privatisation processes, said Mr Agbodo. But most of the companies would not be in a suitable condition for flotation until considerable restructuring had taken place.

Ideally, he said, there should be a combination of local and foreign investment coming into privatised enterprises. With a capital-intensive company such as the Electricity Company of Ghana, local investors alone could not assemble the necessary resources, so the aim would be to form a consortium between local and foreign investors.

The most successful privatisation has been the sale of the Ashanti Goldfields Company, which raised $400 million for the Government and is now listed on the New York Stock Exchange.

In addition, 30 per cent of Ghana Telecom was sold for $38 million while 41 per cent of the shares in the Ghana Commercial Bank were issued on the Ghana Stock Exchange. Numerous international firms - including Alcan Chemical, Barclays Bank International, Coca-Cola International, France's SODECI and Unilever - have also acquired stakes in Ghanaian firms.

State-owned companies still on the privatisation list include the Electricity Company of Ghana, Ghana Airways, the Tema Oil Refinery, the Volta River Authority and the National Investment Bank.

The companies that have been privatised have subsequently enjoyed a level of investment that would not have happened if they had remained under Government ownership and management.

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