The importance of good corporate governance in building strong institutions, communities, and economies, and helping to avoid the collapse of businesses cannot be overemphasized, Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has said.
“From time immemorial, corporate failures had had their roots in poor corporate governance,” Dr Addison stated this.
In a speech read on his behalf by the Second Deputy Governor, Mrs Elsie Addo Awadzi, during the launch of the Corporate Governance Code by the Institute of Directors (IoD) Ghana, he said the global financial crisis of 2007/08, mass corporate failures in Ghana’s banking and securities sectors in the last few years where we saw the demise of 420 institutions licensed by the Bank of Ghana, and several fund management companies licensed by the Securities and Exchange Commission, with colossal losses to depositors, investors, other creditors, clients, employees, suppliers, shareholders, and other stakeholders including the Ghanaian tax payer, were as a result of poor corporate governance.
He said the effects of poor corporate governance tended to be widespread with several stakeholder groups feeling the brunt of the actions or inactions of a few.
Dr Addison said good corporate governance was the bedrock of any modern market economy and the Ghana building back strong from the effects of the COVID-19 pandemic would largely depend on good corporate governance.
“Building a strong and resilient economy, particularly as we emerge from the current COVID-19 pandemic, will therefore require a new emphasis on strengthening governance and sound management of corporate Ghana and public sector institutions to deliver the desired outcomes for all stakeholder groups,” he said.
The Governor said the effectiveness of boards of organisations, strong internal controls, and incentive structures that support prudent management were essential for the success of businesses.
Dr Addison disclosed that the BoG published a Corporate Governance Directive in 2018 for banks and specialised deposit-taking institutions, drawing on best practices in governance from the Commonwealth Association, the OECD, the Basel Committee, and other sources.
He commended the IoD-Ghana for the initiative to develop the Corporate Governance Code, saying the initiative was timely and a strong commitment to nation-building through promoting high standards of Corporate Governance practices in Ghana.
“The case for a National Corporate Governance Code is clear. As a nation, we have a shared responsibility to organise our way of doing business according to a set of values that we can all identify with and that helps secure a future where our individual efforts help us achieve outcomes that make us all better off. The identification and articulation of such values, and a set of principles and prescriptions that will guide how we do business across sectors, will go a long way to help us realise the future we all desire for generations to come,” he said.
Dr Addison said global evidence abounded of how national corporate codes had helped to shape the emergence of viable and world-class businesses fuelled by ethical and effective leadership across corporate and public sectors.
“It is our hope that work on Ghana’s National Corporate Governance Code will be inclusive, authentic to our best values, and draw on work done or being done by stakeholders including regulators like the Bank of Ghana, the Securities and Exchange Commission, the Ghana Stock Exchange, and private sector initiatives such as the Extractive Industries Transparency Initiative, and others,” he said.