SALE OF GOVERNMENT ASSETS
A Presentation at the Freedom Centre
on November 28, 2012
OFFICE OF THE GENERAL SECRETARY
CONVENTION PEOPLE’S PARTY
The struggle for the ownership of property as an essential means of production varies in time and place and has remained the source of conflict and tension between the few ruling-property owning classes and the majority exploited classes. The bourgeois State forms part of the neo-colonial arrangements, maintaining and consolidating a dependent economic structure for political and social influence of the few ruling elites over the larger populace.
As you are well aware, arguments over the sale of state assets or divestiture have been a major feature of the struggle for the ownership of property among classes. Since the collapse of the Soviet Union, socialist countries have undergone pressures to implement unprecedented privatization of State assets. It has been presented that the largest privatization in history took place in Russia between 1992 and 1995 when as many as 75,000 small and medium scale enterprises were auctioned, 14,000 medium to large scale firms were sold and 130 to 140 million new shareholders were created (IFC 1995).
However, to a lesser extent, the same phenomenon occurred in all former socialist countries with the exception of Cuba and China, even though in the case of China, a guarded promotion of liberalisation is ongoing.
According to Stephen Adei on his “Governance, State-ownership and Divestiture – the Ghanaian Experience”, he notes that “the immediate post-colonial economy era in Ghana was characterized by high levels of government ownership of enterprises, high levels of economic regulation, and explicit suppression of financial markets and exchange. This trend continued for most parts of the 1960s, 1970s, and early 1980s when Ghana began to change course with the adoption of the Structural Adjustment Program. Most of these programs included the transfer of state enterprises into the private sector”.
In this discussion, it is important to ask whether poor performance of some of the state enterprises could be attributed to the bourgeois nature of Governance of the Civilian government of PP, NDC, and NPP and also military governments of NLC, SMC, AFRC, and PNDC. Did Nkrumah’s administration succeed in his formative years of establishing and managing state enterprises because the underpinning ideological framework was scientific-socialist driven and therefore appropriate to the pursuit of its corresponding economic policies?
If, from 1957 to the early 60s, Ghana’s increase in productivity in the agriculture and manufacturing sectors was the result of efforts toward strengthening the State’s share and increase in ownership of productive assets, then, the Five Year Development Plan, the Consolidated Plan and the truncated Seven Year Development Plan point to a significant fact: that a growing conflict of the internal and the external was expected to confront the CPP Government heavily in no time.
Pomadze Tomatoe Factory, Komenda Sugar Factory, Asutsuare Sugar Factory, Bolgatanga Meat Factory, Kumasi Jute Factory, Kumasi Shoe Factory, Ghana Railways Corporation, Ghana Airways, Tema Dry Dock, Tema Sanyo, Tema Steel Works, Tema Batteries, Tema Paints Factory, Tema Cold Stores, Tema Food Complex, Abosso Glass Factory, Bonsa Tyres, Kade Match Factory, Suhum Garment Factory, Ghana Fishing Corporation with 21 Trawlers, SSNIT, ADB, NIB, Ghana Commercial Bank, State Insurance Company, State Distilleries, Takoradi Boatyard, Takoradi Cocoa Processing Corporation, Tema Cocoa Processing Corporation and many, many of them which were established by the State with controlling interests, posed an economic threat to Western economic interests in Ghana. From this emerging progressive pattern of economic production and property relations in Ghana, a major source of wealth for financing free education and delivery of quality health care became materialized in Ghana.
The State’s effort in accumulating capital, aimed at productive growth for social good, suffered severely from 1966. Naked implementation of neo-liberal policies of Capitalism, lack of foresight in leadership and unwarranted military takeovers depleted Government’s assets in its own establishment. The private-sector as the engine of growth became dominant in the actions of Governments. Through the ERPs of the 1980s and GPRSs in the 2000s, the sale of Government assets remained the main source of fruit for the survival of the private sector.
It is important to mention that the sales of Government assets have included the following:
(1) sale of whole or part shares/assets of an enterprise, established by the State or in partnership with a private entity, to a private entity. This is commonly referred to as divestiture;
(2) transfer of ownership of public Lands to private interests.
Both form part of a broader notion of Privatization which further involves the promotion of market liberalisation through policies and legislations.
Many times we are confused by the subtle distinctions of definitions of these neo-liberal phrases. But they are arguably all offspring and extensions of Capitalism.
Generally, some underlining reasons usually given over the years by Government functionaries, reactionary think-tanks and the neo-colonial academia, set-up for the justification of the sale of Government assets, have included:
a. Filling in budget potholes
b. Fulfilling IMF/World Bank conditionalities
c. Increasing Foreign Direct Investments (FDIs) targets
d. Re-capitalisation of loss-making state enterprise.
e. Expansion of economy etc.
On the other side of the leaf, one major argument presented by Marxist-Nkrumaists for state-control and management of productive resources has been that, in order to accelerate development after long periods of colonial exploitation and slavery, Governments must intervene decisively by policy, creation of socio-economic infrastructure and ownership of productive assets to bridge income gaps, break barriers of economic and social injustices and accelerate growth of the human resource base of an underdeveloped country. The aim is also to reduce economic dependency on the metropolis.
In 1983, the PNDC Government launched the Economic Review Programme which became the key policy tool for neo-liberal approach to recovering the economy of Ghana.
Among several measures that the PNDC Government took was the disposal of loss-making state enterprises. In order to give legislative enforcement to this neo-colonial arrangement, the PNDC passed the Divestiture of State Interest (Implementation) Law, 1993(PNDCL, 326), which was deemed to have come into force on 1st January 1988, to divest, thus by the State, of any of its interests in any statutory corporation or any corporate body incorporated under the Companies Code, 1963 (Act 179) or under the Incorporated Private Partnership Act, 1962 (Act 152). Note that Section (1) of the Decree, allowed directives of divesture to be carried in accordance with policy directives as the PNDC may from time to time determine.
The Divestiture Implementation Committee, which develops a criteria for the selection of enterprises to be divested and assume such responsibility as they may deem fit over bodies earmarked for divestiture in order to prepare such enterprises for sale, was established.
At the beginning of the divestiture programme, over 300 state-owned enterprises (SOEs) were operating in all sectors of the economy. Whilst a large number of them were in manufacturing and agriculture (including cocoa and coffee plantations, poultry and fishing), others were in the mining, hotel and timber sectors.
Some of the enterprises which were affected by the divestiture programme included the following:
Ghacem Cement (Shares sold to Norwegians)
Ghana Telecom (Shares sold to Malaysians)
Kwame Nkrumah Catering Rest Houses – Atlantic Houses (Sold to private individuals)
Nsawam Cannery (Sold to 31st DWM)
Kanda GNTC (Sold to private individuals)
Atlantic Hotel, Meridian and Star Hotels (Sold to private entities)
Abosso Glass Factory (Sold to private individual)
Continental Hotel (Sold to Golden Tulip)
West Africa Mills Company
Tema Steel Company
Ghana Agro Food Company –formerly TFCC
GIHOC Bottling– (became The Coca Cola Bottling Company of Ghana Ltd)
Gliksen W/A Company (acquired by SUHUMA Timber Company Ltd)
Ghana Oil Palm Development Company (Sold in 1995)
It is necessary to draw a lesson from the political effect of the sale of many of these assets; as an inclusive factor in the deepening of tension and political unrest between pro-democratic groups and the PNDC government. Note that the left in the pro-democratic movement raised questions about the selling of some of these state assets to private foreigners.
Let us now consider few selected cases of recent sale of national assets under the Fourth Republican constitution in the following areas.
In the mining sector, today, Ghanaians have lost their majority shares in AngloGold Ashanti to nothing. In 2007, the NPP Government sold Ghana’s non-controlling interests of 5% to Anglogold Ashanti Ltd. The NDC Government under the Mills Administration in January 2011 also sold the nation’s last shares of 2.5% to Anglogold Ashanti which generated an amount of US $215million, whereas accounts of its utilization was not clearly provided.
Public Lands as a Primary National Asset
According to the laws of Ghana, lands acquired by the government are supposed to be used only in the public interest or for the public purpose for which it was acquired. (Article 20(5) of the 1992 Constitution).
The selling of public lands under a disguised policy of re-zoning of lands for redevelopment of the capital city was embarked by the first NDC Government.
Under Phase 1 of the first NDC Government’s Accra Redevelopment Policy in 2000, the proceeds from the sale of 67 plots of land (sold mostly to companies and private individuals), enabled them to build 83 replacement bungalows and 169 residential units.
However, the Government then did not take into account the Constitutional provision which requires that “the owner of the property immediately before the compulsory acquisition shall be given the first option for acquiring the property” (Article 20: Clause 6).
In 2009, the NPP continued with the running of economic liberalization of the past PNDC and NDC, under a disguised framework of Ghana Poverty Reduction Strategy I and II, placing the private sector as the vehicle for development and growth.
During the NPP’s administration, the Government decided to ignore laid-down procedures, such as open bidding and going for Cabinet approval of allocations, as stipulated in the State Lands Regulations, 1962 (L.I. 230). Instead, between 2003 and 2008, the NPP Minister for Water Resources, Works and Housing, in his individual capacity proceeded to allocate 46.85 acres of residential plots and houses without subjecting the allocation to competitive bidding or the laid-down guideline established by the cabinet.
According to the Committee for Joint Action, a lead campaigner against unlawful and arbitrary sale of public lands, the implementation of the redevelopment scheme under the NPP was so arbitrary and haphazard that even persons who were allocated with the plots did not complete the Application for Leases/Licenses for Government Plots (Form 5) as stipulated in LI 230.
The pressure group identified that the Kuffuor Government’s exclusive and restrictive bidding process created and allocated 103 plots to NPP members and supporters. 88 plots of land located in prime areas at Ridge, Cantonments and Airport were sold under protocol arrangements with premiums ranging between six thousand and eight thousand Ghana Cedis (GH¢ 6, 000/GH¢ 8, 000) per plot.
This sharply brings into light the opportunities opened to a category of people on the basis of their class interest as against the majority interest whether under NDC or NPP.
Ghana Telecom as a National Asset
As part of the privatization policy, the first NDC Government offloaded shares in Ghana Telecom to the Malaysians to restructure and re-capitalize. Before then GT had retrogressively continued to suffer from mismanagement, political manipulation and eventual breakdown in competitive operation.
The Kuffuor Government, on July 3, 2008, signed a Sale and Purchase Agreement with Vodafone International to sell off 70% of the Government’s stake in GT to Vodafone, at an approximate value of US$1.3 billion, plus an expected cash injection of US$500 million, totaling US$1.8 billion. Among several components of what was described as the “Enlarged GT” was the fibre optic. It is public knowledge that documents presented to the Inter-Ministerial Committee showed that the Social Security and National Investment Trust (SSNIT) had expressed its desire to operate a Fibre-optic network in the country but was not allowed to do so. Volta River authority had interest in the utilization of the fibre optic. However, several assets of GT were sold to Vodafone without, firstly, considering local interest. The only reason why these Governments would ignore all available options for an equitable national advantage was/is what some individuals in them would benefit from the transaction.
Notwithstanding the fact we can still wait for the Accra Commercial Court to decide as some members of the CPP still seeking from the court a declaration that the agreement, entered into by the Kuffuor government, was not in accordance with the due process of the law and was therefore a nullity, the case of GT sale to Vodafone is a clear example of the difficulty of neo-colonial regimes in effectively managing state enterprises, since their ideological interest conflicts with the framework of managing state enterprises.
The Agriculture Development Bank and Merchant Bank have similarly attracted the interest of Governments for sale to foreign private investors.
However, it is most welcoming that the Mills-Mahama administration pursued some national effort in the capital re-acquisition of state assets in the Volta Aluminium Company Ltd (VALCO) and Tema Drydock Ltd.
In conclusion, the sale of Government assets has evolved through all successive civilian and military Governments after 1966. This neo-colonial process has affected all productive sectors of the economy: mining, agriculture, banking, transportation etc.
Whereas on one hand, at the start of Ghana’s privatization drive, the sale of Government assets have led to significant retrenchment of labour and strengthening of capital markets for the benefit of few private individuals and firms, on the other hand state-ownership has provided 55% of employment in the formal sector excluding the civil service, and accounted for 25% of domestic investment. It is worth raising the awareness of the direct and overall effects of the sale of Government assets on Ghanaian economic life in order to fast track organised mass revolt against the phenomenon for a better replacement with a dominant public ownership and prudent management of national resources.
 IFC. 1995. Privatization Principles and Practice, Washington D.C.
 Visit: http://www.my-world-guide.com/upload/File/Reports/g/ghana/Governance,%20StateOwnership%20and%20Divestiture%20The%20Ghanian%20Experience.pdf
He is a known reactionary and was a Professor of Leadership, and Rector of the Ghana Institute of Management and Public Administration (GIMPA)
 Ebenezer Akuete. 1992. Privatization in Ghana. Presented at Conference on “Privatization Strategies in Africa,
Mount Clair College, N. Jersey