The travails of Ghana’s financial intermediation industry over the past two years has made for a sorry story of corporate governance shortcomings and outright malfeasance. However, something good may be coming out of the sordid mess after all – the much belated ascension of issues of corporate governance quality to the front-burner of corporate Ghana’s attention.
To be sure, the Bank of Ghana has led the way in this by introducing enforceable directives as to how the financial intermediation institutions under its regulatory purview are henceforth to be governed and how their risks are to be managed too. But other regulators in the financial services industry have been quick to follow suit now that this crucial issue has been finally been brought under the regulatory microscope.
The Ghana Stock Exchange, after taking the heat for its failure to address the defunct UT Bank’s shortcomings with regards to providing the investing public with the information that its own regulations require listed companies to provide, has learnt its lessons and since late 2017 has cleaned its stable by delisting five companies for regulatory infractions relating to corporate governance shortcomings. Similarly, the Securities and Exchange Commission has begun enforcing directives, first issued several years ago, but which subsequently were ignored by the institutions under its regulatory purview without any consequent sanctions being applied. Now the National Insurance Commission is stepping up as well, following unconfirmed rumours – which the NIC dismisses as unfounded – that some of the insurance firms it regulates are tottering on the brink of insolvency due to poor corporate governance practices.
Expectedly, the National Pensions Regulatory Authority will follow suit shortly, especially since the controversies generated by government’s Ghana Amalgamated Trust initiative to recapitalize five indigenous banks has put the spotlight on how private pension funds are being managed.
But the corporate governance shortcomings in Ghana are by no means restricted to the financial services sector. Indeed it is common knowledge that small and medium sized enterprises in particular suffer from this problem, which is largely why banks regard them as inordinate credit risks.
The current focus on good corporate governance presents an excellent opportunity to address the problem universally and holistically. Corporate Ghana as a whole needs to be forced to address the issue, build capacity and overcome the shortcomings.
To this end we welcome the initiatives now being promoted by the Institute of Directors (IoD), an institution which was curiously silent when some of its members in the financial intermediation industry were being exposed for their incompetence and outright malfeasance. The IoD’s efforts to have legislation passed by Parliament making it compulsory for corporate board members to acquire training and competence in corporate governance, as well as the Institute’s commencement of capacity building seminars for corporate board members are pivotal initiatives towards improving the quality of corporate governance at the top tier where it is most instrumental in determining the fortunes of corporate entities.
We now call on the Institute to take its efforts even further and apply them with even more intensity. The IoD needs to collaborate with all professional and commercial associations and institutes as well as regulators and facilitators in each sector of business activity.
Good corporate governance is necessary, indeed critical in every formal enterprise and corporation and the best chance to develop the capacity to practice and enforce it has arrived. It must not be missed.