Prepared by Joachim Harnack.
The first project, the Public Enterprise Technical Assistance Project, became effective in 1987. More recently, two more World Bank projects, namely the second Financial Sector Adjustment Credit (FINSAC II) and the Private Sector Adjustment Credit (PSAC) which became effective in 1993 and 1995, respectively, set the stage for an acceleration of the divestiture process.
As of end-1994, the stock of domestic debt of the SOEs was equivalent to some US$1.5 billion. Of this amount, 75 percent was owed by five enterprises (Volta River Authority, Ghana Telecom, Ghana Ports and Harbor Authority, Electricity Corporation of Ghana, and Volta Lake Transport Company).
In preparing enterprises for divestiture, the DIC is assisted by the State Enterprise Commission (SEC), which aims at making enterprises more viable and efficient prior to offering them to the private sector. There is also a private sector advisory group (PSAG), which transmits its opinions through the two private sector representatives at the DIC.
It is expected that Ghana Telecom will be divested by end-1996.
This includes ¢ 379 billion of sales of AGC shares.
The most dramatic impact was in the tourism sector, with major and rapid rehabilitation of hotels and restaurants.
A case in point is the GIHOC Metals Company, which currently employs 45 workers and produces 1,200 metric tons of steel annually. Before divestiture, the company had been employing 125 workers whose annual production did not exceed 500 metric tons.
This compares with 60,000 civil servants retrenched during the period 1987-93, and some 100,000 workers laid off by the Cocoa Board during the period 1989-91. Overall, public sector employment shrank by more than 50 percent between 1985 and 1991.
Originally there were seven banks, but one of the banks, the National Savings and Credit Bank (NSCB), was merged with the Social Security Bank (SSB).
It is expected that this process will begin in mid-1996.