Not very long ago, under Ghana’s former government, privatization used to be a permanent bone of contention

Counting the cedis. Public companies such as the Electricity Company of Ghana, the Ghana Water Company and Ghana Railways are up for privatization.

with the International Monetary Fund (IMF) and other multilateral lenders. They insisted that the process, which had got underway in 1988, should go faster and cover more ground, while those in power would have preferred to see all that equity stay in the country. At one point, the IMF backed down from a $100 million project it had already agreed to finance on the grounds that the authorities were more interested in paying lip service to the idea than making good on its promises.

That was in the past. The new government has made it clear it not only can get along very well indeed without the state-owned enterprises (SOEs) that used to account for the bulk of Ghana’s economy, it wants to make an all-out effort to mobilize the management skills that the private sector has at its command, as well as its capital. President John Kufuor couldn’t have made it clearer in his inauguration speech. “We are open for business and we plan to create incentives to make Ghana so attractive that investors will begin to look here.”

BENSON POKU-ADJEI Executive Secretary of the Divestiture Implementation Committee (DIC)

Privatization is overseen by the Divestiture Implementation Committee (DIC) which includes representatives of the business sector as well as government officials. To date it has overseen the selling off (or in some cases, the writing off) of 255 state-owned companies. According to the DIC’s executive secretary, Benson Poku-Adjei, there are another 50 or so to go. “This year we have one of the country’s biggest banks, the National Investment Bank, going on the block. Also, we have the State Insurance Company, it’s the biggest and the oldest insurance company in the country.”

The DIC sees its primary role as ensuring fairness and transparency in the tender process. It is also willing to consider other ownership transfer formulas, such as sale of shares, joint venture deals and long term leasing arrangements. In all but exceptional cases, the new proprietors can expect to take over with a clean slate: the government will have assumed all pre-existing liabilities and employment contracts will terminate when the company changes hands. According to Mr. Adjei, this does not have too many social repercussions. “In most cases, these businesses have been operating in the red if they’ve been operating at all, so employees are likely owed their back salary. If the divestment is a success they will at least get paid, and some will be hired by the new owners.”

With companies of the size and turnover of the Electricity Company of Ghana, the Ghana Water Company and Ghana Railways moving through the privatization pipeline, the divestment program continues to draw attention.
Apart from the numbers on the balance sheet, the government is making sure that foreign investors find the rules attractive. With a few exceptions that range from fisheries to barber shops, no activities are off-limits.
However, some sectors, such as mining and petroleum, are under a special regime. The 1994 Ghana Investment Promotion Center (GIPC) Act details a wide range of incentives and guarantees regarding taxation, repatriation of capital profits and dividends, and guarantees against expropriation.