The Pre and Post Financial Performance of Privatized State-Owned Enterprises in Ghana

Abstract

This study aimed at investigating the potential impact of privatization on the financial performance of Cocoa Processing Company Limited (CPC) as an attempt to contribute to the debate on how the privatization of public enterprises may affect the financial performance of these enterprises. Data was obtained from the annual financial reports of CPC five years before and five years after privatization. The indicators examined were profitability, liquidity and gearing. Financial performance ratios (profitability, liquidity and gearing) were calculated and compared. To determine whether there have been any significant differences among them in the pre and post-privatization periods, a t-test was conducted at 5% level of significance since the sample size was small. The findings revealed that while privatization did not seriously affect CPC‟s profit, it led to liquidity improvement and debt reduction. Privatization process in CPC has resulted into no significant changes in financial performance in achieving the objectives of privatization in Ghana. It is recommended that a comparative study of privatization programmes in manufacturing and service industry in various sectors of Ghana be conducted to determine the overall performance level of privatized firms in Ghanaian industries.

Keywords: Privatization, State-owned Enterprises, Financial Performance.