President of the Entrepreneurs Foundation of Ghana, Sam Ato Gaisie, says state companies that are not performing must consider merging with private firms in order to generate sustainable profit so as to expand and become more productive.

He told the B&FT in an interview that: “Government must take stock of all subvented companies, assess their performance and look at merging those ones that are underperforming with businesses in the private sector”.

This practice, he said, will help to prevent the collapse of state-owned companies and rather improve job opportunities, promote expansion, and increase growth in productivity for the country.

“The ideology of every business is to generate sustainable profit to expand and become more productive.
“It is therefore rational for a company that is weak, failing or perhaps facing challenges in the production sector, to consider selling off some shares or merging with other companies.

“It is obvious that mergers will make companies stronger to thrive through the challenges of the business environment, where a company on its own may collapse,” he said.

Mr. Ato Gaisie said mergers should be seen as a beneficial alternative and not a sign of failure on the part of businesses that are involved in the process.

“There are a significant number of businesses in the country that are struggling to survive, and so there is a need for them to consider partnering other companies to enable them become more formidable.

“It is very valuable in this cosmopolitan era for a company to merge with foreign companies. This merger will help to bring on board more equipment and expert knowledge, and also create awareness across the globe,” he added.

Ato Gaisie’s concerns are shared by a number of entrepreneurs who have employed that strategy to drive their global reach and grow profit.

Chief Executive of KAMA Industries, the local pharmaceuticals producer, Dr. Michael Agyekum Addo, sees mergers as a “smart move” for companies that want to expand their frontiers and increase productivity significantly.

The company has merged with ASPEN Pharmcare Holdings Limited, a South African multinational drugs manufacturing company.

He said about the merger: “It was a "smart move" because there was a need to inject more capital into the company.

“This will help us to extend our reach globally, employ more people and enable us to operate more efficiently to become more productive.”

Ecobank Ghana's merger with The Trust Bank (TTB) and efficient cost management contributed to the bank's strong growth in earnings in 2012. It has also reported an impressive 76 percent year-on-year growth in profit before tax.