The Social Security and National Insurance Trust (SSNIT) has begun the process of exiting some unprofitable investments it engaged in between 1986 and 2012 as part of the Scheme’s strategy toward enhanced efficiency.
According to the 2021 Auditor-General’s report, 10 out of 45 unlisted equity companies that SSNIT invested in have not paid dividends to the Trust for the past 10 years. The total investment value of the 10 companies is about GH¢150.3million.
In view of this, the Auditor-General advised that SSNIT assess the operations of these companies to ascertain reasons behind the poor performance and take strategic decisions which safeguard the Trust’s interests.
In a statement responding to this, SSNIT indicated that it is restructuring viable companies while exiting unprofitable entities.
“Management has been engaged in restructuring some of these companies to ensure they become profitable and are able to pay dividends. SSNIT is also in the process of exiting some of these unprofitable companies,” a portion of the statement read.
Some of these investments, SSNIT indicated, are all legacy in nature; however, management has given an indication of pursuing actions to normalise the situation.
Nonetheless, it remains unclear which companies the Trust intends to exit. Currently, SSNIT has investments in companies such as African World Airlines (AWA) and Golden Beach Hotel Limited; a 1.3 percent equity stake in CDH; Trust Logistics Limited; Bayport Financial Services Limited; Intercity STC Coaches Limited, among others.
Per the Auditor-General’s report, in the case of African World Airlines (AWA) the Trust has projected the airline will be able to pay dividends by 2024, following a significant drive to reduce operating costs of the company.
The Intercity STC Coaches Limited continues to record losses, hence its inability to declare and pay dividends. The extended border closure due to the COVID-19 pandemic has affected travel to neighbouring Togo and Cote d’Ivoire, which forms a significant source of revenue for the company.
In the case of Golden Beach Hotel Limited, the Trust is at an advanced stage in the process of seeking a strategic investor. This is to address losses being made by the company.
Regarding CDH, where SSNIT has a 1.3 percent equity stake, the company continues to struggle following the liquidation and license-withdrawal of two key subsidiaries – Ivory Finance and CDH Asset Management – by their respective regulators during the financial sector clean-up. The Scheme’s stake has been for sale since 2014, but there has been no offer for the past five years.
Since the merger between CFC Savings and Loans and Bayport Financial Services in 2016, Bayport Financial Services Limited has not paid dividend – mainly because the two companies’ operations were integrated. However, this is expected to change in the new strategy being implemented.
Also, Trust Logistics Limited has failed to pay dividend to SSNIT due to operational losses on the back of dilapidated vehicles. As a remedy, SSNIT has worked to complete a long-standing asset-split between Trust Logistics Limited and ISTC. It is therefore able to either monetise its assets if needed or leverage others to improve its finances. Additionally, Trust Logistics has struck a deal with Goil and Marado Automated Safety and Vehicle Inspection Company (MASVIC) to generate further income from its landed assets.
The investment report on unlisted companies in 2021 showed that the Trust has over US$206million of its investible funds locked up in four joint ventures. All four projects were together estimated to cost over US$240million.
Accordingly, the Auditor-General recommended that the Trust takes steps to reduce its exposure in these projects.
