The state of corporate governance in Ghana: A proposal to political parties

In Ghana, the state of corporate governance has been a subject of intense debate and scrutiny, particularly given its impact on investor confidence, economic stability and overall national development. 

As the 2024 elections approach, it is imperative that all political parties consider robust corporate governance frameworks as a cornerstone of their economic agendas.

This article explores the current state of corporate governance in Ghana and proposes key measures that political parties should adopt to enhance governance standards.

The current state of corporate governance in Ghana shows significant inroads, as well as challenges. Ghana has made significant strides in establishing a regulatory framework for corporate governance.

The introduction of the Companies Act, 2019 (Act 992), which replaced the Companies Act, 1963 (Act 179), has modernised the legal landscape, incorporating contemporary governance principles and practices.

In the area of institutional support, there are several agencies such as the Securities and Exchange Commission (SEC), the Bank of Ghana (BoG) and the Ghana Stock Exchange (GSE), that are playing pivotal roles in enforcing corporate governance standards.

These institutions have introduced guidelines and directives aimed at improving transparency, accountability and integrity in corporate operations.

Efforts by organisations such as the Institute of Directors-Ghana (IoD-Gh) and the Chartered Institute of Management Accountants (CIMA) have contributed to building the capacity of corporate leaders through training and certification programmes.

Despite the robust regulatory framework, there are significant gaps in implementation and enforcement. Many companies, particularly small and medium-sized enterprises (SMEs), struggle to comply with governance standards due to resource constraints and limited expertise.

There is a prevalent issue of inadequate board independence and diversity. Many boards are dominated by insiders or related parties, which undermines effective oversight and decision-making. Transparency in financial reporting and accountability in corporate actions remain areas of concern.

Incidents of financial mismanagement and corporate scandals have eroded public trust and investor confidence.

There is a need for a stronger emphasis on ethical leadership and corporate integrity. Cases of corruption and unethical behaviour within corporate entities highlight the need for a culture of ethics and responsibility.

Proposal for political parties

As Ghana approaches the 2024 elections, political parties must prioritise corporate governance reforms in their manifestos. The following proposals outline key measures that can significantly enhance corporate governance in Ghana.

Political parties should commit to strengthening the enforcement capabilities of regulatory bodies such as the SEC, BoG and GSE.

This includes providing adequate resources and training to ensure effective monitoring and compliance.

Also, introduce regulatory reforms that streamline governance requirements, making it easier for businesses to comply while maintaining high standards of accountability. Implement policies that mandate a certain percentage of independent directors on boards.

This will enhance objectivity and reduce conflicts of interest in decision-making.

In addition, there is a need to encourage diversity in board composition by promoting gender balance and the inclusion of directors with diverse skills and backgrounds.

Political parties should drive enhanced transparency and accountability through Integrated Reporting that provides reporting standards that combine financial and non-financial performance metrics.

This will provide a more comprehensive view of a company’s operations and sustainability. Strengthen whistleblower protection laws to ensure that individuals who report corporate misconduct are safeguarded against retaliation.

Introduce mandatory ethics training programmes for corporate leaders and board members.

This will instil a culture of integrity and ethical decision-making within organisations.

Encourage companies to adopt integrity pacts that commit them to ethical practices and transparency in their dealings.

Develop capacity-building initiatives tailored for SMEs to help them understand and implement corporate governance best practices.