info@businessghana.com
Weak corporate governance remains a key cause of business failure in Ghana, Mr Simon Madjie, Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC), has said.
Speaking at a lecture organised by the Chartered Institute of Restructuring and Insolvency Practitioners (CIRIP), he attributed the issue to years of poor oversight, unethical leadership, and flawed decision-making.
The lecture was on theme “Unlocking Business Resilience: How CIRA Empowers Companies to Recover from Distress and Thrive.”
Mr. Madjie noted that ambitious expansion without sufficient financial backing exposed businesses to reputational, market, and regulatory risks, often leading to liquidity challenges and delayed payments to suppliers and creditors.
He attributed these challenges to the lack of strategic planning, resistance to change, and external factors such as strong competition and exchange rate volatility.
To address business distress, the Corporate Insolvency and Restructuring Act, 2020 (Act 1015), commonly referred to as CIRA, was enacted six years ago to create a resilient and supportive business environment.
Mr. Madjie described CIRA as a legal lifeline, offering hope to struggling but viable businesses that might otherwise have collapsed under temporary financial difficulties.
“Many companies adopt a reactive stance rather than preparing for potential disruptions. According to the 2023 PwC Global Crisis Survey, 96% of executives have encountered a crisis in the past two years, yet only a third had foundational elements in place to support resilience.
“This lack of preparedness can turn manageable challenges into severe setbacks,” he said.
Mr. Madjie stressed that developed economies provide well-structured support systems and that CIRA represents a shift in Ghana’s approach to business recovery.
The Act focuses on business restructuring, credit protection, financing, and cross-border provisions, offering companies a structured pathway to reorganise and recover.
“CIRA was enacted to provide a modern and efficient insolvency and restructuring regime. It shifts the focus from liquidation to business rescue and aligns Ghana with international best practices.
“At its core, the Act recognizes that failure does not have to be final. Instead, it offers a structured pathway for companies to reorganize, secure temporary protection from creditors, and return to viability,” he said.
“Under CIRA, when a company enters administration, it is granted a moratorium: a temporary legal pause that protects it from creditor actions. This provision is important because it prevents creditors from pursuing legal claims or seizing assets at a time when the company is already vulnerable,” he added.
Mr. Madjie urged business owners and managers to engage insolvency practitioners when facing financial distress.
Dr Ishmael Yamson, Board Chair of Scancom PLC (MTN Ghana), observed that some business managers failed to learn from past mistakes, allowing insolvency to persist.
He commended CIRIP for offering solutions, stating that the lecture not only pinpointed the causes of business insolvency but also presented strategies to prevent it and foster the growth of Ghanaian businesses.
