Regulatory failures, cause of our woes - Focus on BoG and Minerals Commission

BY: Charles Benoni Okine
Dr Ernest Addison, BoG Governor
Dr Ernest Addison, BoG Governor

I believe that as a part of good governance, all agencies should be reviewing regulations and cleaning up those that may be outdated, redundant, or unnecessary. Seth Moulton

Every country is ruled by regulations and laws, among others. The objective is simple – to ensure that individuals and institutions that flout the laws are brought to book. But basically, it is also to ensure that the lives of the citizenry are protected.

Regulatory agencies

By definition, a regulatory agency is a governmental body that is created by a legislature to implement and enforce specific laws, according to Study. These agencies may have quasi-legislative functions, executive functions and judicial functions.

What’s their role

Basically, the activities of every business is in one way or the other, subject to a cornucopia of laws. Business is subject to laws that govern social and economic matters, including income taxation, payroll taxation, environmental laws, occupational health and safety laws, real estate law, employment laws, criminal laws and laws that are specifically related to ones, particular industry, such as insurance, transportation and so on.


It is important to note every function in agency serves two primary functions in government. First, agencies implement laws and they enforce laws. For instance, in its quest to ensure sanity in the banking sector, the industry regulator, Bank of Ghana, recently showed its teeth and collapsed five banks for their inability to live up to expectation. That has caused a stir but that is the law and the role of the regulator.

Second, regulations are the means by which a regulatory agency implements laws enacted by the legislature. By that, regulations can be thought as formal rules based upon the laws enacted by a legislature that govern specific social or economic activities.

How are laws implemented?

Regulatory agencies use a specific procedure to create and implement regulations. This is necessary to ensure that the businesses or individuals do not suffer unduly or are taken unawares. There are some basic steps meant for them to follow and these are international standard practice.

1. Advance notice

It is necessary for an agency that is about to start drafting new regulations to publish advance notice of its proposed rules in the appropriate quarters. In the United States, for instance, this is done with the Federal Registrar, which is available to the public and usually monitored by industry experts to be informed about proposed changes in regulations or proposed new regulations.

2. Proposed regulation

The regulatory agency will draft the proposed regulations to fulfil the requirements of the law upon which the regulation is based. For example, if a new law is passed by Parliament that limits water pollution by illegal miners, the agency will develop regulations that carefully outline the limits of pollution, how the limits are measured, reporting requirements, enforcement powers vested in the agency and penalties the agency is entitled to impose under the law.

3. Public comments

The proposed regulations are published and the public is invited to comment. It's not unusual for industry leaders and interest groups to comment in an attempt to modify the rules to advance their particular interests.

4. Review of comments

The agency will review the public comments and may or may not make any changes based upon them.

5. Final regulation

The completed regulation is published and will eventually be added to the Code of Federal Regulations, which is essentially a list of all the federal regulations, broken into titles and chapters.

6. Implementation

The regulation is implemented or made effective, and enforcement commences.

How they enforce laws

Laws without enforcement become pieces of sentences not even fit to be read. And therefore, regulatory enforcement is the other primary role filled by regulatory agencies. Agencies have a responsibility to monitor businesses to ensure they are complying with regulations. Agencies vary on how they perform their enforcement responsibilities, but we can take a look at a generalised process:

1. Investigation

If the agency has reason to believe that a business has violated its regulations, the agency will commence an investigation. The investigation may include interviewing relevant witnesses and reviewing documents. Some investigations may utilise scientific testing, such as environmental investigations, to determine the level of pollution spewing out of a factory's smokestack. The agency will give the business a chance to respond to the allegations. The response is usually presented in writing with any supporting documentation.

2. Decision

The agency will make a decision, demand any corrective action if necessary, and impose any penalty that it deems appropriate that it is authorised to impose by law.

3. Appeal

Much as the regulatory authority is bound to sanction any business according to law, it is also bound to hear appeals. That means that, businesses have the right to appeal decision taken against them by the regulator.

Are regulators in Ghana working?

Regulatory agencies are usually a part of the executive branch of the government, and they have statutory authority to perform their functions with oversight from the legislative branch. Regulatory authorities are commonly set up to enforce standards and safety or to oversee the use of public goods and regulate commerce. Unfortunately, the role of the many regulatory institutions in the country has been compromised either advertently or inadvertently.

It has become clear in recent times that due to the political influence, many of the regulators are unable to enforce the law. They are made to either sit aloof to watch things go bad or are manipulated to allow the status quo to satisfy a few at the expense of many.

Bank of Ghana

To use the banking sector as a typical example, it is clear that the Bank of Ghana, for many years, has reneged on its responsibility to whip into line, the players under its jurisdiction. As a result, many owners and boards of some financial institutions have had their way and blatantly in broad daylight, abused the system to satisfy their selfish interest. Thankfully, the present Governor in realising the rot and the extent to which it is affecting the economy, has acted. Call it a bit too late. But the fact is that it is better late than never.

While it has managed to crack the whip in the banking sector, it is unfortunate that the same central bank is unable to rein in MenzGold, a private company whose activities is not clearly defined.

One would have expected that the central bank would act to bring the owners of the company to book if, it has truly gone beyond its regulatory mandate. Rather, the owners of the company are calling the bluff of the central bank using in many instances, unprintable words on social media to make a case while the regulator looks on. For the public, this is not just unacceptable but unfortunate and one wonders the size of the force preventing the BoG from acting.

According to an international investment consultant, Dr Sam Ankrah, the latest developments in the banking sector should be a wake-up call for the central bank to critically sanitise the entire financial services sector to prevent a collapse of the system.

He maintained that after dealing with the universal banks, the central bank must also move swiftly to deal with the mess in the savings and loans, as well as the microfinance businesses because that is another area with a lot of rot.

Minerals Commission

For many decades, the commission has also been unable to act as such. It has rather played its role as a revenue collector and allowed a lot of rot within the sector, a phenomenon which is eating the country up today. The commission has in the past licensed many small-scale miners but has seldom checked their activities. Today that inaction has caused a national catastrophe because many of our water bodies are now drying up.

Again with the issue around MenzGold, the commission has issued warnings many times without acting while the purported illegality persists. The company has also called the bluff of the commission and yet, nothing concrete has been done except to issue faint and lame news releases.

Way forward

There is a simple “Spare the rod and spoil the child” saying. This simple and age old quote may sound useless but it is what we have never taken seriously. The regulators in the country have lived up to expectation to stop the rot and abuse in the system.

The so-called influential people who find themselves in high places and use their selfish interest to manipulate the system at the expense of the majority must be exposed if the country is to restore its lost glory and shame.

At a time when the government is touting a Ghana Beyond Aid, it is imperative to understand that the lackadaisical attitude of the regulators in the country cannot get us to achieve that. When the Finance Minister worked hard to find us a Ghc2 billion loan from sale of bonds, hell broke lose. Little did we know that we can raise four times that amount to fix a mess caused by a few people because the industry regulator sat aloof. Regulators in the country owe Ghanaians a duty to crack the whip as soon as the alarm bells start sounding. They must note that their failures can create more grievous challenges with the potency to crack an economy into pieces.