A legal practitioner, Mr Robert Nii Arday Clegg, says the country has failed to base its corporate governance guidelines for banks on historical developments but continues to copy the guidelines of other countries.
That, he said, had led to the lack of clarity in the corporate governance space in the banking sector, resulting in confusion between players and the regulator.
That blanket copying had also further earned the country the tag of ‘imitators’ – a group of countries that copy business guidelines and principles from their peers, Mr Clegg said at the 5th Banking Summit in Accra, dubbed ‘Branding Ghana’s banking space in the banking sector, resulting in confusion between players and the regulator.
That blanket copying had also further earned the country the of 'imitators' - a group of countries that copy business guidelines and principles from their peers, Mr Clegg said at the 5th Banking Summit in through corporate governance.’
He stated; “In the West and in corporate governance literature, they call countries like Ghana imitators because we did not originate anything as far as business is concerned.”
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“That imitation is why we find ourselves doing so many things that are always clashing.
The regulator is not sure and businesses are also not sure,” he stated.
He said rather using the lessons from the banking sector to develop an original and homemade guideline that could address peculiar challenges in the sector, the country had rather been copying from existing guidelines in the United States of America and other countries.
This, he said was not good for the country-specific nature of challenges facing the banking sector
Lack of records
He said the country’s corporate governance guidelines were not based on past experiences or research but rather an imitation of what is being implemented in the Western world.
“There is a culture in governance and how have we assimilated that culture in our governance structure?
The Westerners develop their corporate governance principles through their own culture and experiences but in our situation we just go and copy and change the name,” he added.
He said while he could walk into the libraries of a top university, top company and get access to what happened in the past and how it was resolved, the situation is different in Ghana because there are no records or case studies.
“Even as recent as the collapse of the Bank for Housing and Construction (in 2000), we cannot get any document on it.
There is no history on the corporate governance problems in the country,” he noted.
Corporate governance and banking crisis
The lack of proper and well suited corporate governance structures and practice in the country has caused many dire problems for many institutions and in particular, the banking sector.
One of the major causes of the present banking crisis in the country was caused by lack of good corporate governance practice and structures.
Today, the country is forced to dole out about Gh¢13 billion to save the situation because seven banks in the country, led by their boards, failed to abide by the principles of good corporate governance.
Rural banking Act
Mr Clegg also emphasised the need for the government to develop a separate rural banking Act that would regulate rural banks in the country.
He said it was not fair for rural banks to be regulated by the same Act that is used in regulating commercial banks.
“Rural banking is very peculiar to Ghana so why haven’t we developed a separate Act to regulate them?
Is it because the United States has not developed one yet for us to copy?” he asked.
While urging the country to develop its own guidelines based on past experiences, Mr Clegg said there were, however, some examples that the country could learn from outside such as the bankers pay, which calls for a full disclosure of how much chief executive officers and managing directors of banks earn.
He believes this will enhance transparency and deepen corporate governance in the banking sector.
“Being a CEO or an MD of a bank is no secret and I, therefore, don’t know why how much they earn should be a secret.
I can go on the internet and find out how much all bank executives in the United States earn so why is it not so in Ghana?” he asked.
He also appealed to the banks to adopt the claw back system, which provides that certain benefits enjoyed by bank executives be taken away from them when the performance of a bank is backsliding.
He said if this system was introduced, bank executives would be wary of the decisions they make in the banks.
“If we had this claw back system in Ghana, I am sure we wouldn’t have been experiencing these recent banks collapse,” he noted.