How Politicisation Cripples SSNIT’s GH¢233.8 Million Hotel Portfolio: PAC Warns of Pensioner Risks

Introduction

The Social Security and National Insurance Trust (SSNIT), Ghana’s primary pension fund manager, faces a critical challenge with its hospitality investments. Politicisation of state-owned assets has stalled efforts to divest loss-making hotels, threatening a GH¢233.8 million lodge portfolio. As highlighted by Public Accounts Committee (PAC) Vice Chairperson Davis Ansah Opoku, this toxic environment deters investors, endangering the GH¢15,918.69 million total portfolio as of December 31, 2023.

SSNIT manages contributions from over 1.5 million active workers to secure retirees’ futures. Yet, underperforming hotels like La Palm Beach Hotel and Elmina Beach Resort have drained resources without returns. This article examines the root causes, financial impacts, and pathways forward, optimizing SSNIT divestment strategies for sustainability.

Why SSNIT Hotel Portfolio Matters

With a compound annual growth rate (CAGR) of 16.31% in recent years, SSNIT’s investments fund pensions. Hospitality assets, once promising, now symbolize how politicisation cripples SSNIT’s lodge portfolio, risking long-term viability.

Analysis

Davis Ansah Opoku’s November 7 remarks during a Channel One TV interview exposed deep-seated issues. For three years, no investors have shown interest in SSNIT’s distressed hotels, despite urgent divestment needs. Opoku attributed this to politicisation of state finances, creating a hostile climate for private sector involvement.

PAC’s Scathing Critique

“SSNIT holds monies for pensioners, and when invested in loss-making ventures, it must be addressed,” Opoku stated. He advocated for local investors to revive these assets, emphasizing, “If a local investor has what it takes, we should encourage them.” This underscores the need to depoliticize SSNIT hotel sales.

Financial Breakdown of the GH¢233.8 Million Burden

SSNIT has injected GH¢233.8 million into La Palm Beach Hotel, Elmina Beach Resort, and Busua Beach Resort via equity and loans, receiving zero dividends or repayments. The PAC reviewed 14 years of data:

• La Palm Beach Hotel: Losses in 11 of 14 years; never paid dividends; 5-year average profitability GH¢6.7 million; ROE -4.2% (2012-2017).
• Elmina Beach Resort: Losses in 9 years; no dividends; average GH¢740,604; ROE -4.8% (2010-2017).
• Busua Beach Resort: Losses in 9 years; no dividends; average GH¢32,268; ROE -31.7% (2010-2017).

These figures highlight why SSNIT seeks strategic investors for the Golden Beach Hotels Group, excluding top performers like Labadi Beach Hotel.

Summary

In summary, politicisation has crippled SSNIT’s GH¢233.8 million hotel portfolio by scaring off bidders for three years. PAC urges divestment to protect pension funds, following the failed 2024 Rock City deal amid political backlash. Successful hotels prove potential, but underperformers demand urgent action.

Key Points

Practical Advice

To revive SSNIT’s hotel portfolio, stakeholders must prioritize depoliticisation and structured divestments. Here’s actionable guidance:

Steps for Successful SSNIT Divestment

1. Engage Stakeholders Early: Consult unions like TUC before bids to avoid strikes.
2. Promote Local Investors: As Opoku suggests, incentivize Ghanaian firms with tax breaks for turnarounds.
3. Transparent Valuations: Use independent advisors; Rock City’s $61.2 million bid topped $59.1 million valuation.
4. Segment Assets: Divest losers separately from winners like Labadi Beach Hotel.
5. Government Backing: Policy reforms to shield deals from political interference.

Implementing these could unlock value, boosting SSNIT’s returns and Ghana’s hospitality sector.

Points of Caution

Politicisation poses severe risks to SSNIT’s investments:

• Pensioner Vulnerability: Losses erode funds for 1.5 million contributors.
• Investor Deterrence: Three-year bidder drought signals high-risk perception.
• Economic Drag: Idle assets miss tourism growth opportunities in Ghana.
• Precedent for SOEs: Affects other state firms, stifling privatization.

Without reform, the GH¢233.8 million burden grows, jeopardizing SSNIT’s mandate.

Comparison

Loss-Makers vs. Profitable SSNIT Hotels

A stark divide exists in SSNIT’s lodge portfolio:

Labadi’s GH¢48.1 million dividends contrast sharply, proving targeted divestment viability.

Legal Implications

SSNIT divestments fall under Ghana’s Divestiture Implementation Committee (DIC) and Public Enterprises (Negotiation and Award of Contracts) Regulations, 1995 (LI 1619). The Rock City saga highlighted compliance needs:

• Stakeholder Engagement: Failure led to TUC strike threats, invoking labour laws.
• Transparency Mandates: Bids must exceed valuations publicly; Rock City’s did.
• Ministerial Conflicts: Bryan Acheampong’s ownership raised ethics flags under ministerial code, though not illegal.

Future deals require legal safeguards against politicisation to avoid court challenges.

Conclusion

Politicisation cripples SSNIT’s GH¢233.8 million hotel portfolio, as PAC’s analysis reveals. With no investors for three years and a failed Rock City bid, pension funds suffer. By championing local buyers, ensuring transparency, and depoliticizing processes, SSNIT can safeguard its GH¢15.9 billion assets. This crisis calls for unified action to protect Ghanaian retirees and revitalize hospitality investments.

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