Anatomy of the Privatization of State-Owned Enterprises (SOEs) in Ghana: Implication for Policy and Accountability

Abstract

With the administrative and operational functions of State-Owned Enterprises (SOEs) becoming increasingly complex and sophisticated among developing countries by the 1980s, privatization was recommended by the IMF/World Bank as a remedy to these institutional deficiencies . This is contingent on the neoclassical debate that private ownership rather than public ownership of management and operations of SOEs results in prudent policy process and accountability. Therefore, this study sought to assess the validity of this assertion by employing the Principal-Agent theory in assessing the level of accountability between the citizens (principal) and the government (agent) during private ownership of service delivery. As a qualitative study, this paper adopts unobtrusive content analysis of an empirical study of the privatization of Ghana Water Company Limited (GWCL). The government (agent) under the Principal-Agent theory is to ensure that the private operator, Aqua Vitens Rand Limited (AVRL) respects the terms of divestiture, while upholding the principles of accountability. However, the findings of the study suggest that the failure of government (agent) to uphold core accountability mechanisms such as transparency, accessibility to information, sense of ownership, responsiveness, and conformity to established monitoring and evaluation measures, contributed to the inability to achieve key performance targets, leading to the unsuccessful policy outcome of the privatization contract. This paper, therefore, argues that the failure to adopt accountability mechanisms in the divestiture of SOEs will inevitably compromise administrative policy outcomes.