Experiences of Ghana in the Management of Public Enterprises and a Comparative Analysis of USA and Benin Public Enterprise
Public Enterprises in Diaspora
Research Paper (undergraduate) 2010 8 Pages
The term paper assessed the experiences of Ghana in the management of public enterprises and a comparative analysis of USA and Benin public enterprise
MANAGEMENT OF PUBLIC ENTERPRISES IN GHANA
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 service. To foster exports of coffee, palm kernels, and cocoa, the Agricultural Produce Marketing Board was founded in 1949.
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
The government also introduced a performance monitoring and evaluation system to improve state enterprises productivity and efficiency as well as to provide incentives for strong performers and disincentives for weak performers. By 1989 fifteen enterprises had responded positively, tuning a combined pre-tax loss of C418 million from the previous year into pre-tax profits of c 19 billon, 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.
PUBLIC ENTERPRISE RESTRUCTURING AND PRIVATIZATION IN GHANA
Another salient feature of public administration in Ghana is the privatization of the state-owned enterprises (SOEs). SOEs have been a prominent feature of the economic landscape in Ghana since the 1950s. they have played a major role in virtually all sectors of the economy. In 1983 the government had a majority holding in 181 parastatals, with a minority interest in fifty-four companies. It was the poor performance of the state-owned sector that led to calls for public enterprises reform and divestiture. Public enterprises incurred large deficits; their total operating deficit in 1982 amounted to more than 3 percent of GDP, which was close to total government spending on education, health, social security, and welfare that year. Public enterprises had also become a significant drain on the government’s budget, with support for them ranging from 10 percent of government expenditure in 1982 to 8 percent in 1986. The sector was a burden on government in various other ways as well, such as requiring indirect support on tax and loan arrears.
The government decided in 1994 to accelerate the divestiture program. The fist major action taken a was the sale of its majority stake in Ashanti Goldfields Corporation (AGC). The government earned US$350 million from this sale and another US$23 million from the sale of its stake in seven manufacturing companies listed on the Ghana Stock Exchange. Divestiture of its controlling stakes in the other state-owned mining companies was substantially completed in 1995. Subsequently, the government announced that it would sell another 114 enterprises.
The sale of the government’s holding on AGC, reducing its shareholding from 55 percent to 30 percent, to farmers, workers and civil servants in Ghana has generated a broader constituency for accelerated privatization. Similarly, the sale of its minority holding in seven companies listed on the Ghana Stock Exchange to international fund managers has improved Ghana’s image among foreign investors. Of the 260 majority-owned SOEs that are owned both directly and indirectly by the government, only 101 were divested between 1988 to 1997. Another nineteen small and medium-sized majority-owned SOEs were sold to the private sector by 1997 under the government’s accelerated divestiture program.