The impact of privatization on Ghanaian companies: Financial analysis of Ghana Oil Palm Development Company (GOPDC)

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Ghana after independence engaged in a rigorous industrialization and set up a number of State Owned (Enterprises to create jobs and to mate the country self-reliant. At the overthrow of the Convention Peoples’ Party (CPP) government, policies to move the country towards a command system was halted and many of the industries were abandoned. In the 1980’s it became clear that many of tile State Owned Enterprises were mere waste on tire country’s resources. After discussions with tile IMF and the World Bank, a policy to divest most of tile enterprises was implemented: ‘This started the current privatization exercise going on in the country. At first, loss-rnaking enterprises were divested but later on even viable government enterprises were also divested. Controversies existed as to whether it was advisable for the government to divest state enterprises or not. The privatization exercise faced a lot of criticisms and it called for studies into the area to find out which of the opposing claims could be justified. This study therefore attempted to compare tile pre privatization period of Ghana Oil Palm Development Company (GOPDC) to the post privatization era of tile same company. The basic hypothesis underlying the study is that there is no significant difference in the performance of State Owned (Enterprises (SCIEs) in terms of Profitability, Efficiency, Output levels and rates and Employment pre and post privatization. GOPDC was selected for a case study. Using these indicators and subjecting them to time series as well as financial ratio analyses, it was revealed that even though GOPDC was not doing badly, it improved greatly after privatization. Judging from the improvement made within the few years that GOPDC was privatized it was apparent that privatization was better for the company. However, divestiture of State Owned Enterprises (SOEs) ought to be transparent and tile revenue generated from it must be used for the general development of the country. This way privatization will benefit tile whole country.
A thesis submitted to the Department of Economics and Industrial Management in partial fulfilment of the requirements for the degree of Master of Business Administration (MBA)degree, 2004