Out of the 45 unlisted companies in which the Social Security and National Insurance Trust (SSNIT) has made investments, ten of them have failed to pay any dividends to the Trust for the past decade.

As of December 2020, the combined investment value of these ten companies amounted to GH¢150.30 million.

Among these companies, only four have shown capital appreciation, exceeding the initial investment value. On the other hand, the remaining companies have individual values that fall below the amount originally invested by SSNIT.

The total portfolio value of all 45 companies reached GH¢3.26 billion as of December 2020, and within the same year, SSNIT's share value in the ten companies amounted to GH¢326 million.

Campanies

The Social Security and National Insurance Trust (SSNIT) revealed a list of defaulting companies, including Golden Beach Hotels (GBH), CDH, Kumasi Abattoir, Accra Abattoir, Intercity STC Coaches Limited, Bayport Financial Services, Trust Logistics Limited, Africa World Airlines (AWA), SIMNet, and Metro Mass Transit Company Limited.

This disclosure occurred during a meeting with the Public Accounts Committee (PAC), where SSNIT's management, led by Director-General Dr. John Ofori-Tenkorang, addressed certain infractions highlighted in the 2021 Auditor-General's report of the company.

According to James Klutse Avedzi, the Chairman of PAC, the SSNIT representatives serving on the boards of these companies explained that they have not been profitable for the past ten years.

“This could have serious effect on sustainability or solvency of the Trust in a long time. We recommended that management should assess the operations of these companies to take strategic decisions to safeguard the interest of the Trust,” he said.

Response

Responding, the Deputy Director-General in charge of Investment, Kofi Osafo-Maafo, said: “We are working on the initiatives for a turnaround in their operational performance over a longer term. With that they will be able to pay dividends”.

He stated that the Trust was looking for a strategic investor to buy into Golden Beach Hotels (GBH).

“What we expect to get are strategic investors who have both the financial muscle and knowledge of managing hotels better to be able to turnaround performance of our hotels,” Mr Osafo-Maafo said.

Kumasi, Accra Abattoir

He claimed the Accra Abattoir was a CSR initiative that SSNIT was working to exit due to a similar pricing issue that prevented it from turning a profit. He also claimed the Kumasi Abattoir began as a CSR investment and had been challenged by non-commercial pricing.

“Following a board and shareholders resolution of the company, they are looking to dispose of four acres out of about 21 acres of land to settle the debt.

“Once the financing cost are out of the way, we expect the underlying financial performance of the company to be better,” Mr Osafo-Maafo said.

Regarding CDH, he stated that the Trust, which owned a 1.3% equity position in the business, was eager to leave the organization and that two of the group's underlying financial asset management companies had had their licenses withdrawn.

“Since we last came here (PAC), we have found a buyer for our shares and a transactional advisor is now being procured to look at the valuation of our shares.

“We should be, hopefully, looking to exit CDH,” Mr Osafo-Maafo said.

Bayport Financial Services was mentioned as a non-bank financial organization that had initially planned to make a dividend payment to the Trust in 2024.

According to Mr. Osafo-Maafo, the business produced a profit and added to its reserves in 2022 and the year before.

“But as we are all aware within the financial sector and as a result of the Domestic Debt Exchange Programme, the banking and non-financial institutions are facing challenges and, therefore, the need to protect their balance sheet.

“We, therefore, do not expect them to pay a dividend this year. We are hopeful that if the economic conditions improve, they should be able to pay dividend on the back that they are now posting positive earnings,” he said.

Mr Osafo-Maafo said his outfit was looking forward to Trust Logistics Limited to leverage its existing assets as they had gone into partnership with Goil Company Ltd to leverage their landed assets.

“We are also in discussions with Central Oil Refinery and if that should come off then the primary issues of our competitiveness on the market and our ageing fleets will be resolved to improve its performance in order to pay dividends,” he said.

Intercity STC Coaches Limited

Mr Osafo-Maafo described the challenge with Intercity STC as “a more difficult situation” of pricing and operating cost.

“On the operating cost, they are facing head wings from fuel cost that has resulted in a much higher operating cost.”

“However, they were not able to get permission to improve their pricing that resulted in negative margins,” he said, adding that a meeting would be held at the end of September and December this year to assess the situation.

“And if their financial performance permits, there will be a plan in place to meet their indebtedness,” Mr Osafo-Maafo said.

He said that AWA was using leased aircraft to operate, which had an impact on the company's operating costs.

“There are also internal issues that we are addressing with the majority shareholders with respect to corporate governance and we expect that if all of these come together the company should be able to pay dividend in 2024,” Mr Osafo-Maafo said.

Regarding SIMNet, the service provider for the National Lottery Authority, it was mentioned that they are currently pursuing a diversification strategy.

“If that should materialise, it will help transform the company. In the interim, we are working with the authority to renew their licence so that they improve their financial performance going forward,” Mr Osafo-Maafo said.

Additionally, he said that the Metro Mass Transit Company Limited was a CSR venture that had problems with pricing from a business perspective.