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Business News of Tuesday, 22 January 2019


Circus at GACL; a template of how Ghana Airways failed

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The unexpected dismissal of Ghana Airports Company Limited’s Managing Director, Mr. John D. Attafuah, last week raised serious corporate governance issues and brought back memories of self-destructive actions that caused the collapse of national flag-carrier, Ghana Airways.

The company has had three managing directors and three separate boards within six years. Mrs. Doreen. Owusu Fianko was replaced as Managing Director by Mr. Charles Asare, who was also in turn replaced by Mr. John Attafuah.

At the board level, the Kuntu Blankson-led board that worked with Ms. Owusu Fianko was dissolved in 2013 and replaced by the Tony-Lithur-led board, which stayed in office until the end of 2016. The Oboshie Sai-Coffie board then took over from the Lithur-led board in 2017.

The interference in the company’s operations from time to time – prompted by the subtle push for ‘control’ of the company by the Transport/Aviation Ministry, State Enterprises Commission (SEC) and the Finance Ministry – threatens to derail gains made and open the floodgates for political interference in one of the few SOEs that is self-sufficient and has a good balance sheet.

The Ghana Airports Company Limited (GACL) is a limited liability company, duly registered with the Registrar-General’s Department on January 2006 and commencing operations on January 2007, which can sue and be sued.

The government of Ghana is the sole shareholder. Given its very nature, the company is enjoined to adhere to the strict reporting requirements as stipulated by law.

By its very nature, the company is able to source for funds independently to undertake various airport infrastructure projects on the back of its own balance sheet; cover its own overhead costs; hold Annual General Meetings; and pay dividends to its shareholder—GoG.

The GACL, for instance, secured funding from the African Development Bank and Absa for the expansion works on the Kotoka International Airport, renovation of Kumasi Airport, Construction of Ho and Wa Airports, and the construction of Terminal 3.

However, GACL is listed as an ‘agency’ of the Aviation Ministry along with the Ghana Civil Aviation Authority (GCAA).

Indeed, section 4.0 of the Report of the Committee on Roads and Transport of Parliament on the Annual Budget Estimate of the Ministry of Aviation For the 2019 Financial Year captures the two institutions as agencies of the ministry, for which reason an amount of GH¢318million was approved for its programmes and projects in 2019.

Being a limited liability company, the State Enterprises Commission (SEC) by law is the mandated body to oversee and coordinate its activities to ensure targets are met devoid of interference – along with government’s varying equity interests in about eighty-four (84) companies, comprising forty-four (44) wholly state-owned enterprises (SOEs) and forty (40) joint venture companies (JVCs).

The current board of the company, chaired by Ms. Oboshie Sai-Coffie, replaced the Tony Luther-led board in 2017. Both boards were constituted by the shareholder and had representatives from the Aviation Ministry, Finance Ministry and State Enterprises Commission among others.

One therefore wonders why the board, duly constituted by the shareholder, is side-stepped in major decisions; why a limited liability company is still seen as an ‘agency’ of the Aviation Ministry; and the why the SEC’s role in the management of this SOE is muted.

Clear-cut governance structure needed

The company ought to be insulated from political interference and allowed to grow under the supervision of a stable board constituted by government through the SEC.

Ethiopian Group, which government is seeking to partner for the establishment of a new home-based carrier, has survived and remained profitable even in the face of serious political turmoil because it has remained independent of government control.

The Ethiopian Airports Enterprise (EAE), a subsidiary of the ET Group that manages and maintains airports, is operated by professionals and devoid of political interference. The GACL should be seen in that light.

Government need not approve annual allocations to the GACL to undertake projects, but rather either increase its working capital or allow the GACL to source for funding on its own and provide the requisite guarantee as and when needed.

Of course, being a ministry with vested interest in the sector, a closely working relationship between the Aviation Ministry and GACL will bode well for the industry.

The board should be allowed to advertise the position of Managing Director and appoint the successful individual with a fixed term of office. Though this may require an amendment of the company’s constitution, it would be the start of keeping politics out of a purely business matter.