Demonstrators on June 19, 2024  to halt the sale of SSNIT's shares in hotels
Demonstrators on June 19, 2024 to halt the sale of SSNIT's shares in hotels

Learning from history: Guide to privatisation in Ghana

Privatisation has been a recurring theme in Ghana's political and commercial history, often marred by issues such as political insiders bypassing proper procedures to acquire state-owned enterprises. 

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These actions undermine public trust and compromise economic efficiency, highlighting the need for a thorough examination of past instances and the implementation of robust policies.

The botched privatisation attempts of the Volta Aluminum Company (Valco) and Ghana Oil Palm Development Corporation (GOPDC) illustrate these failures. Valco's initial sale to Kaiser Aluminum and later to International Aluminum Partners, and GOPDC’s sale to the Siat Group failed to meet their objectives, resulting in no tangible benefits for the citizens.

These instances were plagued by poorly defined acquisition processes. Successful privatisation can yield significant benefits. The UK's 1980s privatisation wave, which included companies like British Telecom and British Gas, led to increased efficiency, profitability and substantial improvements in services and infrastructure.

The economic ripple effect included job creation and innovation, demonstrating the potential public benefits of well-executed privatisation. Conversely, Russia’s 1990s privatisation serves as a cautionary tale.

The rapid transfer of state assets into private hands led to the rise of oligarchs who acquired these assets at minimal prices, resulting in significant public treasury losses and increased economic inequality. 

Similar

Similar issues in Ghana include the sale of SSNIT assets to political associates at reduced prices, further eroding public trust and government integrity. To prevent these issues, Ghana must strengthen its legal frameworks and enforcement mechanisms.

For instance, the UK’s Bribery Act 2010 offers clear guidelines for managing conflicts of interest and mandates disclosures. Similarly, the US Sarbanes-Oxley Act ensures transparency in financial reporting and prevents corporate fraud, and the EU’s Public Procurement Directives promote fair competition for public contracts.

Adopting anti-corruption measures from Sweden, such as strict penalties for bribery, mandatory reporting and whistleblower protection, can help combat corruption. Ghana should establish an independent anti-corruption commission to enforce these measures, conduct regular audits of privatisation transactions and protect whistleblowers.

Privatisation

Privatisation can alleviate the financial burden on Ghanaian taxpayers by reducing government debt, increasing efficiency and improving financial performance. The privatisation of Japanese National Railways in 1987, for example, drastically improved efficiency and service quality while reducing operational costs and debt.

Similarly, the Indian fertiliser industry saw higher technical efficiency and productivity levels post-privatisation. For privatisation to foster economic growth and development without corruption, Ghana must implement independent auditing, public disclosure of bidding processes and establish a task force to oversee privatisation.

Engaging with international organisations for best practices in ethical asset management is also crucial.


The writer holds certifications in public policy management from USAID YALI and GIMPA. 
E-mail: [email protected].

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