Performance and divestment of state-owned enterprises in Ghana

Ghana's state-owned enterprises have performed poorly, not only during the economically disastrous period of the 1970s and early 1980s, but also since the government introduced the Economic Recovery Programme in 1983. This article examines the attempts made to reform Ghana's SOEs with reference to the adoption of a performance contract system and a programme of divestment. It is argued that the past experience of state ownership has been disappointing, mainly because of the low political cost of government interference in the operation of SOEs. This in turn has become one of the reasons why the government has quite recently resorted to divestment, which seems to be a more efficient way of reviving SOEs than the performance contract system proved to be. Initially, political obstacles hampered the divestment programme, but increasingly the government has been able to overcome these obstacles, such that the programme can be expected to alter the political economy of Ghana in a radical and irreversible way.