Cotton firm's tortuous path to privatisation

The privatisation of state-owned enterprises is often fraught with difficulties—witness developments at Benin’s National Society for Agricultural Advancement (Sonapra), a cotton-processing firm.

Privatisation of the debt-ridden Sonapra began over a year ago in June 2003, but has stalled several times—prompting unions and the media to allege that corruption has taken root in the process.

A ruling earlier this month by the Technical Commission for Denationalisation (CTD), has spurred hopes that backroom wheeling and dealing over Sonapra may have come to an end, however.
The CTD oversees all privatisations in Benin.

The cotton firm’s 40 gin plants are being sold off in four equal lots. By last month, four companies had been identified as possible buyers of these lots: Société cotonnière intégrée (SCI-Kagnassy), Promodec-Talon, CDI-Christophel and Jefect Becot Industries (JBI SA).

The companies had until September 30 to present the CTD with bank guarantees of their offers. One, JBI SA, failed to meet the deadline.

On October 5, the commission declined to give the firm an extension. This was despite the fact that JBI SA presented it with a letter from President Mathieu Kerekou’s office insisting that the company receive an additional 20 days to obtain the necessary documentation.

A copy of the letter, dated September 30, was published in a privately-owned daily called The New Tribune on October 7. In part, it reads: the “president of the republic asks that upon receipt of this letter, you, the Technical Commission for Denationalisation, grant an additional twenty (20) days so that the provisional successful bidder, JBI SA, can provide you with the documents required in your letter of notification…”

“It is extremely important to the country’s highest authority…that you closely follow these instructions,” the letter adds.

Sources in the cotton industry who have requested anonymity claim that Kerekou has ties with one of the partners in JBI SA, and that he has thrown his weight behind the company in support of this individual.

Some wonder how the president will react to the CTD’s refusal to give JBI SA more time; nonetheless, the commission’s announcement has been welcomed.

“The decision of the commission is a victory for economic transparency over scheming and corruption in the highest reaches of power,” said a member of the Inter-Professional Cotton Association (Association interprofessionnelle du cotton, AIC). (The association groups people who work in Benin’s cotton industry.)

Added Evelyne Dossou, an employee of a private cotton company located in the financial capital of Cotonou, “The commission did its job well and took a courageous stand. If only all our institutions functioned so independently.”

While Sonapra’s assets were initially expected to bring in about $62-million, reports now indicate that government may earn almost $80-million from the sale.

The main two unions active in Sonapra contend that the firm’s assets could fetch almost $190-million, however—and that officials are being bribed to accept below-market prices for the company.

The leader of the Ultra-Sonapra union, Theodule Affo, further claims that the “debt of 20-billion CFA francs (almost $38-million) of Sonapra does not justify hasty privatisation.”

He says that some of the companies which have successfully bid to take over Sonapra already owe about $34-million to the firm. If they have the funds to purchase its assets, why not the money to repay Sonapra, asks Affo.

During a press conference held July 27 in Cotonou, the unions questioned why a provision that disqualified bidders who owed Sonapra money had apparently been disregarded in the privatisation process.

Sofidec-Tankpinou, the company which appears likely to replace JBI SA as the buyer of a quarter of Sonapra, is said to be in debt to the cotton company. JBI SA was itself reported to owe Sonapra a substantial amount of money.

However, the AIC source says that Sofidec-Tankpinou has obtained funds from other businesspeople in the cotton sector to help it repay Sonapra and purchase some of the firm’s assets.

The unions are also concerned about the rights of Sonapra workers, many of whom risk losing their jobs. The four companies that are taking over Sonapra will each inherit about 500 employees. According to one estimate, only 130 of these workers will be retained.

In a related development, the World Bank—widely viewed as having pushed for the privatisation of Sonapra—has also taken steps to counter this perception.

A source at the bank’s Cotonou office, quoted in the October 4 edition of the Friendship daily, stated that the body never demanded the sale of Sonapra.

Instead, said the bank official, the suggestion was put forward by various government ministers on the grounds that Sonapra’s debt might prevent donors from extending further aid to Benin.

Whatever the outcome of the privatisation squabbles, many view them as just the latest in a series of misadventures at Sonapra.

Since 1996, no less than seven directors-general have taken the helm of the organisation. With little managerial continuity, Sonapra’s performance has not been distinguished.—IPS

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