Ghana - Public Enterprise

 Public Enterprise Report No: ; Type: Report/Evaluation Memorandum ; Country: Ghana; Region: Africa; Sector: Public Enterprise Reform; Major Sector: Public Sector Management; ProjectID: P000890 The Ghana Public Enterprise Credit for US$10.5 million equivalent was approved in FY88, was fully disbursed and was closed in FY96, after two one-year extensions. The Implementation Completion Report (ICR) was prepared by the Africa Regional Office. The Borrower’s contribution is included as an appendix. The objective was to provide technical assistance to implement the reform of State-Owned Enterprises (SOEs) agreed under the first Structural Adjustment Credit (SACI) of April 1987; the second Structural Adjustment Credit (SACII) of April 1989; and the Private Sector Adjustment Credit (PSAC) of May 1995. Specifically, the credit was to strengthen the State Enterprises Commission (SEC) and the Divestiture Implementation Committee (DIC), enabling them to manage the SOE reform program, assist selected SOEs implement managerial and operational improvements and develop restructuring programs, and assist in implementation of the first phase of the divestiture program. The project did not fully achieve its objectives, but it did, on the whole, make a useful contribution in preparing the groundwork for privatization and improving the financial and technical efficiency of SOEs. Training of SOE personnel financed under the project, has contributed to an improvement in firm performance. Computers and accounting software have been introduced into selected SOEs and financial reporting was improved. Implementation was slow, in part, because at the time of project approval, the Government had not developed fully the political consensus required for the privatization of SOEs on a significant scale. Nevertheless, a database containing profiles of large SOEs was created which, together with detailed restructuring plans, created a firm foundation for divestiture. Progress was also made in improving the legal and institutional framework governing SOEs. The privatization program gradually gained momentum and, up to the close of the project, DIC had assisted in the privatization of 77 SOEs and the liquidation of a further 40. The project fell short of its institutional development objectives insofar as the capacity of SEC and DIC remains limited; and there have been difficulties in retaining skilled staff given the poor employment conditions and benefits compared to alternatives in the private sector. The ICR rates project outcome as satisfactory, sustainability as likely, and Bank performance as satisfactory. It considers achievement of institutional development objectives to have been partial. OED concurs with these ratings, but rates project outcome as marginally satisfactory given the shortcomings noted in achieving the institutional development objectives. The ICR is of satisfactory quality. The main lessons to be drawn from this project are that (a) programs involving systematic changes, like privatization, require building a consensus among all stakeholders; (b) technical assistance can only supplement, not replace local resources and key agencies must be able to offer terms of employment that attract and retain high caliber staff; (c) more attention should be given to monitoring and evaluation, especially of outcomes. No audit is planned.