Capital Market Development

REPORT OF

TECHNICAL WORKING GROUP

ON

CAPITAL MARKET DEVELOPMENT:

ROLE OF DIVESTITURES

AND PRIVATIZATION

OF

GOVERNMENT ASSETS

MAY 15, 2006

TABLE OF CONTENTS Chapter 1. 2. 3. 3.1. 3.2 3.3 3.4 3.5 3.6 3.7 4. 4.1 5. Description Executive Summary Introduction Deliverables Current Policies and Practices on Divestiture Joint Venture Agreements Government Assets for Privatization (SOEs and JVs) Prescriptions for Constraints Institutional Arrangements for Divestiture Projected Divestiture Receipts for 2006 Template for Divestitures on the GSE Other Issues Listed Debt Market ` 8 11 14 16 17 18 20 22 22 Page 3 5

Appendix: Overview of Ghana’s Capital Market 24

2

1. 1.

EXECUTIVE SUMMARY There are considerable delays in giving authorizations for divestitures to be consummated. It is recommended that some level of authority be given the Divestiture Implementation Committee (DIC), where desirable, to reduce the delays and thereby keep to divestiture time-table. Public floatation and listing on the Ghana Stock Exchange should always be the first option in the sale of Government Assets. All future Joint Venture Agreements should not have clauses that impede Government’s exercise of its free will to sell its Joint Venture holdings to the public. Government should initiate out-of-court settlement of all joint venture disputes and persuade JVs to waive their right of first refusal to pave the way for privatization through share issues. Persons representing Government holdings on the board of joint venture companies must have performance contracts and laid down means of reporting to Government. State Enterprises Commission should be empowered and resourced to outsource to private companies, some of the audit required to prepare companies for privatization. The Divestiture Implementation Committee should be the sole implementing institution for divestitures. Sector Ministries should not execute divestiture of companies under their Ministries. The... [continues]

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