‘Stop Privatizing SOEs’

By Esther Awuah

Ekow Afedzie, Deputy Managing Director of the Ghana Stock Exchange (GSE) has stated that the common practice whereby government sells it shares in non-performing State Owned Enterprises (SOEs) must be avoided.

He suggested that such companies should be allowed to raise capital by listing on the stock exchange.

“The agenda the Securities and Exchange Commission (SEC) and GES have been trying to sell to government is not to necessarily privatize SOEs by selling its shares, but allow these companies to go raise capital from the stock market probably through bonds. It achieves the same thing,” Mr. Afedzie noted.

Speaking at the media launch of the 2012 Capital Market Week, Mr. Afedzie indicated that one of the key objectives for setting up the Stock Exchange in 1990 was to use the market to privatize SOEs but only a few companies have listed on it.

“Since the establishment of the GSE, we have not had more than 10 SOEs being privatized through the stock exchange. It is sad to hear SOEs collapsing because it is mainly state. We heard about the State Transport Company (STC) -  if they had gone public some years ago, I am sure they would have had some private investors or shareholders in it, and we would not have seen what is happening today.”

He therefore called for a paradigm shift where policy makers would consider reviving non-performing SOEs through the stock exchange.

Adu Anane Antwi, the Director General of the SEC, who launched the week’s celebrations, also stated that instead of using pension funds from the National Pensions Regulatory Authority (NPRA) for equity investment the corporate bond market should rather be developed.

He stated that “strictly speaking, pension funds should not be invested in equities because of the risky nature of equities; pension funds will normally invest in fixed income securities where you can budget for the incomes that you are going to receive each year and therefore you know your cash flow.”

He therefore emphasized that “the key areas that pensions will have to develop for us are the bonds market therefore we must develop our corporate bond market to make sure that we have investment products for this pension funds.”

The week celebrations will commence on 29th October 2012 and end on 4th November 2012.