A Deputy Governor of the Bank of Ghana (BoG), has challenged all organisations, especially indigenous businesses in all sectors of the Ghanaian economy, and public sector organisations to showcase their efforts over the years to abide by good corporate governance standards.
Mrs. Elsie Addo Awadzi, Second Deputy Governor of the BoG says while the importance of good corporate governance in building strong institutions, communities, and economies, and helping to avoid the collapse of businesses cannot be overemphasized, poor corporate governance has been at the roots of corporate failures.
She was speaking at the virtual media launch of the fourth edition of the Institute of Directors-Ghana (IoD-Gh) Corporate Governance Excellence Awards, on the theme “Good Corporate Governance and Ethical Leadership: An Essential Requirement for Organizational Turnaround”.
She said examples abound, including the global financial crisis of 2007/08, the mass corporate failures in Ghana's banking and securities sectors in the last few years leading to the demise of 420 institutions licensed by the BoG, and several fund management companies licensed by the Securities and Exchange Commission, adding that the effects of poor corporate governance tend to be widespread with several stakeholder groups feeling the brunt of the actions or inactions of a few.
“Rebuilding our economy post-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. Good corporate governance is indeed the bedrock of any modern market economy.”
Mrs. Awadzi described the theme of the 2021 Corporate Governance Excellence Awards as a call to action for a national dialogue on the role of good corporate governance in national efforts to get the Ghanaian economy back fully on its feet, after the ravaging effects of the new coronavirus pandemic.
She pointed to a business survey conducted in May and June 2020 by the Ghana Statistical Service, the UNDP and World Bank which assessed the impact of the COVID-19 pandemic on Ghanaian businesses, and reported that businesses were significantly affected with several many remaining closed and shedding jobs even after the three-week lockdown was lifted, adding that while fiscal and monetary policy interventions helped the private sector somewhat to weather the storm, the adverse effects of the pandemic continue to be felt.
And while economic activity has picked up significantly in the year to date, there is however, no gainsaying that the business environment remains challenging with significant uncertainty in the economic outlook given the changing dynamics of the pandemic.
“Surely, in these challenging and uncertain times, the quality of leadership and governance is key to shape new visions and ways of doing business that will stand the test of time. The ability of businesses to recover fully from the pandemic and to engage competitively in the new normal will hinge strongly on good corporate governance. Good corporate governance will ensure that businesses are run and governed in a manner that harnesses the scarce resources available to create lasting value for all their stakeholders on a sustainable basis. In the new normal, good corporate governance will be even more of a critical element of institutional survival, resilience, sustainability,” she pointed out.
Mrs Awadzi said the Bank of Ghana recognizes that good governance in the financial sector alone cannot promote robust and sustainable economic growth for all except all of corporate Ghana join in to promote the desired socio-economic transformation.
“The extent to which the banking sector can continue to lend to the private sector and the public sector, indeed the extent to which other parts of the financial sector can provide funding to businesses, is directly related to the extent to which corporate Ghana is governed. Poorly-run business are the bane of banks' non-performing loan portfolios, which threaten the viability of the banking system and indeed feeds back into stagnated economic growth as banks tighten their credit stance. It is therefore in everyone's interest that we promote best practices in corporate governance nationally to help build strong institutions, industries, and ultimately a strong, inclusive and sustainable economy, and a strong nation.
“Indeed, it is encouraging to note that with Ghana's new Companies Act of 2019 (Act 992), which has brought with it much higher standards of corporate governance and accountability designed to promote a stronger private sector and Ghanaian economy, the minimum common denominator in governance for all companies of all sizes incorporated in Ghana has also been elevated. Similarly, provisions of the Public Financial Management Act of 2016 (Act 921), the State Interests and Governance Authority Act of 2019 (Act 990), and others, have all raised the bar for the governance of public sector institutions to help promote transparency, accountability, and prudence in the management of public institutions for the benefit of all Ghanaians.”
She expressed confidence that the Corporate Governance Excellence Awards of the IoD-Gh will go a long way to help entrench the culture of good corporate governance in Ghana.
President of the Institute of Directors-Ghana, Mr. Rockson K. Dogbegah said the overarching aim of the Awards is to champion Director Professionalism and development towards excellence and best practices in good corporate governance for the benefit of organizations and stakeholders and for the prosperity of Ghana.
He said Directorship plays a key role in the wealth and value creation of nations, with the Board of Directors being the focal point in the corporate governance system and legally mandated with directing and overseeing organisational success.
He said while good corporate governance contributes to improved organisational effectiveness, Directors provide leadership to ensure sustainable good corporate governance culture to advance responsible economic growth and innovation.
He issued an exhaustive corporate governance code of best practice and urged compliance by organisations to engender desirable outcomes.