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Elsie Addo Awadzi, Second Deputy Governor of the Bank of Ghana

Second Deputy Governor of the Bank of Ghana, Ms. Elsie Addo Awadzi said that the importance of good corporate governance cannot be overstated in building strong institutions, communities and economies and helping to avoid business collapse.

Since time immemorial, she said, business failures have their roots in poor corporate governance.

Explaining further, she said examples abound including the 2007/08 global financial crisis, massive corporate bankruptcies in Ghana’s banking and stock market sectors in recent years where we have seen 420 accredited institutions disappear. by the Bank of Ghana, and several fund management companies licensed by the Securities and Exchange Commission, with colossal losses to depositors, investors, other creditors, customers, employees, suppliers, shareholders and other stakeholders, including the Ghanaian taxpayer .

Clearly, the effects of poor corporate governance tend to be widespread, with several stakeholder groups bearing the brunt of the actions or inactions of a few.

Ms. Addo Awadzi was speaking at the launch of the project – development of the National Code of Corporate Governance by the Institute of Directors of Ghana. She represented the Governor of the Bank of Ghana, Dr Ernest Addison.

“Good corporate governance is indeed the foundation of any modern market economy. Building a strong and resilient economy, especially as we emerge from the current COVID-19 pandemic, will therefore require a new emphasis on strengthening the governance and good management of Ghanaian businesses and public sector institutions in order to achieve the desired results for all stakeholder groups.

“The standards of corporate governance continue to evolve around the world, with an increasing emphasis on effective risk governance, the promotion of sustainable and social development goals, the effectiveness of the board. administration, strong internal controls and incentive structures that support prudent management. “

“In Ghana, the Bank of Ghana issued a corporate governance guideline in 2018 for banks and specialist depositories, drawing on best practices in governance from the Commonwealth Association, OECD, Basel Committee and other sources.

In November 2019, the Bank of Ghana also released the Ghana Sustainable Banking Principles to guide specialized banks and deposit-taking institutions in modeling their operations to promote world-class standards in environmental, social risk management. and governance.

“Through a combination of these two instruments, the Bank of Ghana expects banks and specialized deposit-taking institutions to govern and manage their activities in a way that promotes economic, environmental and social objectives and thus creates sustainable value for shareholders and other investors. , depositors, employees, communities, the environment and the nation as a whole. It is a key part of our contribution to promoting a more inclusive, sustainable and resilient economy.

“The Bank of Ghana recognizes that good corporate governance in the banking sector alone cannot promote strong and sustainable economic growth for all. Strong governance in all Ghanaian companies and even in public sector institutions is necessary to promote the socio-economic transformation that we all want for Ghana.

“The extent to which the banking sector can continue to lend to businesses is directly related to the extent to which Ghanaian businesses are governed. Poorly run businesses are the bane of banks’ non-performing loan portfolios, which threaten the viability of the banking system and in fact fuel stagnant economic growth as banks hesitate to extend more credit.

It is therefore in everyone’s interest that we promote best practices in corporate governance nationwide to help build strong institutions and industries and ultimately a strong economy, inclusive and sustainable, as well as a strong nation.

We recognize the efforts that other regulators and even other stakeholders are making to achieve the same goals I have set out above. Now is the time to join forces to work on a national code that transcends industries and sectors and types and sizes of businesses.

Indeed, it is encouraging to note that the new Ghanaian Companies Law of 2019 (Law 992) which I call the minimum common denominator in governance for all companies of all sizes incorporated in Ghana, has governance standards. high for all businesses. Likewise, the provisions of the Public Financial Administration Act 2016 (Act 921), the Authority of State Interest and Governance Act 2019 (Act 990) and others have all raised the bar for the governance of public sector institutions, including public enterprises. to help promote transparency, accountability and prudence in the management of state resources for the benefit of all Ghanaians. “

“The arguments for a national corporate governance code are clear. As a nation, we have a shared responsibility to organize the way we do business around a set of values ​​that we can all relate to and that help ensure a future where our individual efforts help us achieve results. that make us all better. Identifying and articulating these values, along with a set of principles and prescriptions that will guide the way we do business in all sectors, will go a long way in helping us achieve the future we all desire for generations to come. to come.

“Around the world, there are examples of how national corporate codes have helped shape the emergence of viable, world-class businesses fueled by ethical and effective leadership in the corporate and public sectors. .

The King’s Code on Corporate Governance, now in its fourth iteration, is a good example of how a national code unites a people around clear values ​​and purpose in the pursuit of legitimate business goals. in a way that advances the common good. Other examples can be found in the UK, Mauritius, Zimbabwe, to name a few. “

“We hope that the work on the Ghana National Code of Corporate Governance will be inclusive, authentic to our best values, and build on the work done or underway by stakeholders, including regulators like the Bank of Ghana, the Securities and Exchange Commission, the Ghana Stock Exchange and private sector initiatives such as the Extractive Industries Transparency Initiative, and others, ”she added.

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