A multi-stakeholder project to develop a National Corporate Governance Code to serve as a unified reference for ethical corporate governance practices in the country, has been launched by the Institute of Directors-Ghana, (IoD-Gh).

It seeks to harmonise the myriad of industry and sector specific codes of ethics into a national code that will further enhance sustainable job and wealth creation in Ghana, as well as minimize, if not eradicate the ravaging effects of corporate governance failures, according to its sponsors.

A draft of the code is expected to be ready by April 2022, for various levels of discussions and validation, to be eventually submitted for ratification by August. A committee to see to the drafting of the code will be inaugurated in January 2022, according to timelines shared by IoD-Gh.

Launching the project which is being championed by IoD-Gh on Thursday, the Second Deputy Governor of the Bank of Ghana (BoG), Mrs. Elsie Addo Awadzi, said the harsh effects of poor corporate governance are widespread and that the initiative to instill good governance best practices should be embraced by all Ghanaians.

She said the importance of good corporate governance in building strong institutions, communities, economies, and the nation, as well as helping to avoid the collapse of businesses cannot be overemphasized, adding that from time immemorial, corporate failures have had their roots in poor corporate governance.

Citing numerous examples of failed corporate institutions and businesses locally and internationally, she said the cost of such failings are manifold and affect virtually everyone, not just the owners of the businesses or shareholders.

She pointed to the 420 banking institutions that lost their licenses in the recent BoG financial sector clean-up, as well as the about 50 Securities and Exchange Commission-regulated fund managers which lost their licenses and said at the root of their challenges were poor corporate governance issues.

“Evidently, the effects of poor corporate governance tends to be widespread and is not only felt by shareholders who put in their capital, but then in the case of the banking sector and the Securities and Exchange Commission regulated entities, they ultimately affect the depositors and the investors whose savings over the years are then whittled away. It has implications for employees, your suppliers and other counter parties of these institutions, and ultimately, it has implications for government in terms of lost tax revenues. And in the case of the banking and securities sector crisis, you saw how it has implications for taxpayers whose monies were also used by government to bail out the depositors and the clients of fund management firms without which we would have had serious economic and social problems on our hands,” she said, and stressed that “Ultimately, the issue of good corporate governance is an issue that all Ghanaians must care about.”

She said rebuilding the Ghanaian economy particularly after the pandemic will require a new emphasis on strengthening governance and sound management of corporate Ghana, as well as public sector institutions including State Owned Enterprises, to deliver the desired outcomes for all stakeholder groups.

Mrs Awadzi said the case therefore for a national corporate governance code for Ghana is clear and that as a nation, Ghanaians have a shared responsibility to organize their way of doing business according to a set of values that they can identify with and which will help to secure a future where their individual efforts help to achieve outcomes that make everyone better off.

President of the Institute of Directors-Ghana, Mr. Rockson K. Dogbegah, who blamed the development of sector specific codes which he said do not cover the entire spectrum of the economy, on the absence of a national code and urged widespread support for the present effort, explained that when developed, the code will provide ease of compliance and reference, promote ethical culture, defective control, good performance and legitimacy of both public and private institutions.

It will also enhance Ghana’s global appeal as an investment destination, provide clarity, harmony and synergy, and boost investor interest and confidence, and will be in conformity with international best practices.

He pledged the commitment of IoD-Gh to make the process an all-inclusive affair, saying that strong corporate governance practices are key to strategic development since well managed companies are less likely to experience bankruptcies and thus are better able to contribute to the public purse through the payment of taxes and other corporate social responsibilities.

Mr. Dogbegah was particularly enthused with the level of representation of major stakeholders during the virtual launch of the project, including corporate umbrella institutions and regulators such as the Bank of Ghana (BoG), Trades Union Congress (TUC), State Interests and Governance Authority ISIGA), Association of Ghana Industries (AGI), Ghana Stock Exchange (GSE), and Securities and Exchange Commission (SEC).

He said the health of the economy has a direct link to good corporate governance which is so fundamental to the country’s wellbeing, and lamented Africa’s poor showing in terms of the total number of countries with operational national good corporate governance codes.

Quoting a research by the African Peer Review Mechanism, he said only 19 of the 55 countries on the continent have national codes, and even where they exist, the provisions are mostly divorced from the realities of the socio-cultural and business contexts.

“There is therefore the compelling need to prioritise the development of context-specific corporate governance codes that meet the needs of African businesses and people,” he said.

Various contributors to the discussion including Messrs. Chaka Nkofo and Mike Eric Juru, presidents of the Institute of Directors from Lesotho and Zimbabwe respectively, Ekow Afedzie of the GSE, Rev. Daniel Ogbarmey Tetteh of the SEC and President of the Ghana Bar Association, Yaw Boafo also emphasized the need to extend the ambit of the code beyond big corporate institutions to include small businesses and traders, and to seek widespread collaborations to ensure stakeholder buy-in, as well as the incorporation of national values and alignment with Ghana’s national constitution.