Franklin Cudjoe, the President of IMANI Africa Policy Think Tank, has publicly defended the decision made by the Social Security and National Investment Trust (SSNIT) to divest its shares in four hotels amidst public disapproval of the move.
According to Franklin Cudjoe, it makes sense for SSNIT, a state-owned entity notoriously exploited by politicians past and present, to downsize its unprofitable real estate ventures and focus on more lucrative investments.
Furthermore, Cudjoe recommended that SSNIT explore co-investment opportunities with the private sector to revamp its wholly-owned hotels, which are currently operating inefficiently.
“Not only will that free up some liquidity, but it will also amputate the long arm of the politicians, which tend to reach into the brick-and-mortar businesses over which SSNIT has control”.
Franklin Cudjoe
Moreover, Franklin Cudjoe expressed his support for a competitive divestiture that attracts new investment, cutting-edge technology, and expertise while ensuring Ghanaian management remains in place.
Despite public skepticism, Cudjoe thinks the investment plan and price negotiated for the four hotels are a fair deal, a view that diverges from the public’s stance.
As such, Franklin Cudjoe noted that as a Land Economy expert, he endorses SSNIT’s move to tap into diverse expertise, enhancing its financial performance.
Franklin Cudjoe revealed that a colleague of his noted that numerous people have raised questions about the wisdom of many SSNIT investments, wondering if they were truly worthwhile.
Furthermore, Franklin Cudjoe noted that according to his colleague, the common perception is that SSNIT’s survival is solely due to the regular monthly contributions it receives, otherwise, it would have been bankrupt by now.
As such he emphasized the said colleague’s firm belief that SSNIT’s venture into the hotel industry was a wasted investment, indicating that there are a lot more ventures the Trust could have benefitted from.
SSNIT Financial Accounts Show Five Years of Losses
Moreover, Franklin Cudjoe pointed out that, according to his colleague, the hotel valuations revealed a troubling trend: five consecutive years of losses, as reflected in the financial accounts.
As such, he pointed out that his colleague was forced to use the depreciated replacement cost approach for the valuation, as the preferred profits method was not feasible.
“Which rational investor will keep to this investment given the high capital outlay and maintenance costs?” – Franklin Cudjoe
Franklin Cudjoe wondered if any savvy investor would dare to acquire these unprofitable hotels, given their history of financial struggles, emphasizing the risks of holding onto such an unprofitable venture.
The Social Security and National Insurance Trust (SSNIT) is offloading 60% of its stake in four hotels to Rock City Hotel, owned by Bryan Acheampong, as part of a strategic partnership aimed at addressing its financial challenges and bolstering its operations.
The four hotels included in the deal are Labadi Beach Hotel, La Palm Royal Beach Resort, Elmina Beach Resort, and Ridge Royal Hotel, all of which will be partially owned and operated by Rock City Hotel should the agreement fall through.
Meanwhile, the sale ignited controversy and raised eyebrows, with many expressing concerns about potential conflicts of interest due to Bryan Acheampong’s dual role as Minister for Food and Agriculture and owner of Rock City Hotel, which has sparked debates about the transparency and fairness of the deal.
As such, Organized Labor voiced strong objections and called on the government to halt the process, citing grave concerns about state capture and the urgent need for transparency, accountability, and a more inclusive decision-making process.
However, SSNIT countered that the decision was made following a meticulous evaluation process, during which Rock City Hotel presented the most compelling technical and financial proposal, and that all necessary procedures were adhered to, to ensure a fair and transparent outcome.
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