New Public Management in Africa: Emerging Issues and Lessons by Benon C Basheka & Lukamba-Muhiya Tshombe
Author:Benon C Basheka & Lukamba-Muhiya Tshombe [Basheka, Benon C & Tshombe, Lukamba-Muhiya]
Language: eng
Format: epub
ISBN: 9781498743402
Google: HpjMAQAACAAJ
Goodreads: 34762904
Publisher: Routledge
Published: 2017-09-01T00:00:00+00:00
Failures
Potter (2015:10â11) provides insights into some of the failures of privatisation in Ghana. One of them relates to valuation and method of privatisation. In a specific case in 1996, the Divestiture Implementation Committee reportedly signed 21 outsourced consultancy contracts and spent more than $1.8 million, but the venture failed and little returns were realised. Another failure of note was the slow pace of privatisation. The period between listing of firms and actual privatisation was often so long that target enterprisesâ performance was adversely affected as they could not borrow from banks, enter into new contracts, and keep employees motivated, all of which affected their operations and final sale value. Also, the government did not pay enough attention to the welfare of employees affected by privatisation in terms of laying out firm plans before implementation. It was only after a massive workersâ protest that an $85.7 million retaining and redeployment programme was set up with minimal impact. Further, often there were protracted delays in paying severance packages to retrenched workers, which invariably affected less skilled and older employees more as they had less chance of employment in the private sector. More fundamentally, there was no transparency on a number of fronts: provision of a clear public understanding on what privatisation involved, the privatisation process itself, methods of choosing SoEs to be privatised, and how bids were evaluated. More seriously, bidding was not publicly advertised. On the contrary, interested bidders were required to approach the Divestiture Implementation Committee; this provided opposition with grounds for suspecting the privatisation process to be under a shroud of corruption. Delays in divestiture of strategic companies such as Ghana Oil (GOIL), Produce Buying Company, and Tema Oil Refinery have been a notable feature of the privatisation programme. By far, however, the most glaring failure is in the privatising of water. In 1988, a recommendation was made to privatise water by leasing water systems to two private operators (Afriyie, n.d.:57). Consequently, five multinational companies were identified for bidding. However, hardships were experienced, especially by women and children, in attempts to privatise water. Lack of investment in infrastructure spurred urban public protests and forced government to renationalise provision of water in 2011.
According to Ntiri (2010:10), some of the reasons given by the Divestiture Implementation Committee for the poor performance of Ghanaâs SoEs include over-staffing; decision-making paralysis as a result of bureaucratic and laissez-faire attitude; lack of technical expertise; non-commitment and lack of entrepreneurial attitude; and inadequate managerial incentives, working capital, and investment in new plant and machinery. Additionally, the Ghanaian governmentâs decision to embark on privatisation may have been influenced by internal and external factors (Ntiri, 2010:11) that compel governments in developing countries to privatise. The fiscal crises of the 1980s and the need to reduce expenditure and increase revenue, managerial ineffectiveness and consequent poor performance of state enterprises, the need to liberalise and deregulate the market to promote competition and gain access to the global market are examples of internal factors. Given the circumstances leading to the adoption
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