By Joshua Worlasi AMLANU
The Social Security and National Insurance Trust’s (SSNIT) plan to divest its majority stakes in some six hotels has hit a significant roadblock, with negotiations stalling over disagreements on payment terms, according to the Director General, Kofi Bosompem Osafo-Maafo.
This development marks the latest twist in a protracted sale process that has been ongoing since 2018. This is being compounded by last week’s directive from the National Pensions Regulatory Authority (NPRA).
SSNIT’s Director General revealed during a media briefing that negotiations with Rock City, the preferred bidder, have reached an impasse. “The assets have not been sold. The negotiations have stalled because we can’t agree on the payment terms,” Osafo-Maafo stated.
Rock City had offered US$61.2 million for SSNIT’s 60% stake in four hotels, slightly above the US$59 million valuation based on recent comparable sales.
The crux of the disagreement lies in the payment structure. Osafo-Maafo explained that while SSNIT prefers a single upfront payment, the memorandum of understanding allows for negotiation on terms and duration of payment. This flexibility, intended to facilitate the sale, has instead become a point of contention.
The divestiture process, which officially began in 2018 following a board directive, aimed to address the poor financial performance of SSNIT’s hotel assets.
“Out of our six hotels, five have never paid dividends. Only Labadi Beach Hotel has paid dividends over the last three years,” Osafo-Maafo revealed, underscoring the financial rationale behind the sale.
The COVID-19 pandemic initially delayed the process, but it gained momentum in 2022, attracting nine interested companies. This pool was eventually narrowed down to five qualified bidders after a technical evaluation, with Rock City emerging as the frontrunner.
However, the proposed sale has faced significant opposition from labor unions and some stakeholders. Critics argue that divesting profitable assets like the Labadi Beach Hotel is not in SSNIT’s best interests.
Responding to these concerns, Osafo-Maafo countered, “A lot of people say, ‘Well, why do you sell a profitable asset?’ But our objective is different. We want to maximize what we get when we sell the 60%.”
The Director General further explained that even profitable hotels like Labadi are not meeting their full potential, with returns significantly below what SSNIT could earn from other investments. This argument forms the cornerstone of SSNIT’s justification for the sale, emphasizing the trust’s fiduciary duty to maximize returns for pensioners.
Adding another layer of complexity to the situation, the National Pensions Regulatory Authority (NPRA) recently issued a statement calling for the suspension of the sale process. The NPRA has directed SSNIT to halt negotiations with Rock City, a company owned by Food and Agriculture Minister Bryan Acheampong, citing guidelines that SSNIT claims it has not received.
“Yesterday we had a bit of a rude awakening, if I can call it that, with the NPRA statement that we need to suspend this based on their guidelines, which we don’t have a problem with,” Osafo-Maafo noted. “But at the end of the day, we will continue to engage stakeholders.”
The NPRA’s intervention has raised questions about the regulatory oversight of the sale process and potential conflicts of interest, given the ministerial connection to the preferred bidder. The authority is reportedly engaging with the Minister for Employment on this issue and other related developments, signaling potential government involvement in resolving the impasse.
Despite these setbacks, SSNIT remains committed to finding a resolution that serves its interests as a pension fund. Osafo-Maafo emphasized, “If there’s an agreement, there is. If there isn’t, the hotel sits where we are. Because at the end of the day, it’s about engagement.”
The Director General defended the transparency and integrity of the sale process, asserting, “We can say hand on heart for every single document that we deliver that we went in line with the Procurement Act.”
However, he conceded that more engagement with all interested parties could have helped avoid the current challenges.
As negotiations continue, the outcome of this protracted process could have significant implications for SSNIT’s investment strategy going forward, as well as for the broader hospitality sector in Ghana. The trust faces the delicate challenge of balancing its fiduciary duty to pensioners with concerns raised by various stakeholders about the sale process and terms.
The situation highlights the complex interplay between public asset management, regulatory oversight, and stakeholder interests in Ghana’s evolving economic landscape. It also underscores the challenges faced by public institutions in divesting underperforming assets while ensuring transparency and maximizing returns.
For SSNIT, the stakes are high. As a pension fund, it needs to ensure its investments generate adequate returns to meet obligations to pensioners. “We want to achieve better returns from the hotel’s assets than we hitherto have,” Osafo-Maafo stated, reiterating SSNIT’s primary goal.
