Maiden national corporate governance code in the offing

BY: Timothy Ngnenbe
Mrs Elsie Awadzie, 2nd Deputy Governor, BOG
Mrs Elsie Awadzie, 2nd Deputy Governor, BOG

The first-ever national corporate governance code, a framework that synergises sector guidelines into an overarching code for all sectors of the Ghanaian economy, is in the offing.

The code, which seeks to promote good corporate governance, defined as the system of rules, practices and processes by which a company is directed and controlled, is being spearheaded by the Institute of Directors, Ghana (IoD-Ghana), with support from key state and non-state institutions.

When developed, the code will provide mechanisms to promote ethical culture, defective control, good performance and legitimacy of both public and private institutions.

Launch of initiative

A key milestone in the journey towards getting the code was marked yesterday when IoD-Ghana launched the multi-stakeholder project for the development of the framework.

The virtual launch brought together high-profile personalities from state and private sector institutions, such as the Bank of Ghana, the Securities and Exchanges Commission (SEC), the Ghana Stock Exchange (GSE), the Private Enterprises Federation (PEF) and the Ghana Association of Industries (AGI).

Following the launch of the project, a technical committee from key stakeholder institutions will be set up by the end of December this year to put the draft code together.

Per the road map, the national corporate governance code is expected to be finalised and launched next year.

BOG endorsement

The Second Deputy Governor of the BoG, Mrs Elsie Addo Awadzi, who launched the project on behalf of the Governor, Dr Ernest Addison, called for inclusivity and thoroughness in the development of the code.

She observed that good corporate governance was the bedrock of every market economy, for which reason every effort must be made to develop the national code.

While outlining a number of corporate governance practices in the banking and the financial sectors, she noted that good corporate governance in the banking sector alone could not promote economic growth and sustainable development.

She said there was the need for strong governance in all of Corporate Ghana to promote socio-economic transformation.

Mrs Awadzi noted that poor corporate governance played out in the banking sector crisis that hit Ghana from 2017 to 2019 and more recently when 420 banking institutions and 50 SEC-regulated fund managers lost their licences.

"The case for a national corporate governance code is clear. As a nation, we have a collective responsibility to organise our way of doing business according to a set of values we can identify with, and that will help secure a future where our individual efforts help us achieve outcomes that make us all better off," she said.

Governance code imperative

For his part, the President of IoD-Ghana, Mr Rockson K. Dogbegah, said the development of the national corporate governance code was imperative, as it would promote good corporate governance outcomes in the country.

He observed that although the BoG, the SEC and many other regulators had issued sector-specific corporate governance guidelines to streamline operations in their areas, it was important to get a single code that spoke to all sectors.

"We have witnessed many corporate governance breaches in this country which have impacted very negatively on our socio-economic lives, resulting in many interventions from key stakeholders.

"This code, when developed, will provide ease of compliance, reference and clarity, boost investor and business confidence, provide harmony and synergy, enhance our global appeal as a country and be in conformance with international best practices," he said.

He said strong corporate governance practices were key to sustainable development, since well-managed companies were less likely to experience bankruptcy and were better placed to contribute to the public purse through the payment of taxes.

"The health of our economy, therefore, has a direct link with good corporate governance, which is fundamental to the well-being of our country," he said.