Poor Corporate Governance Killing Businesses – BoG Deputy Governor

A Deputy Governor of the Bank of Ghana (BoG), Elsie Addo Awadzi, has emphasised the need for businesses to uphold sound corporate governance practices.

According to her, good corporate governance plays a critical role in building strong institutions, communities, and economies.

She added that good corporate governance also makes businesses and organisations resilient and sustainable, thereby saving them from collapse in any eventuality.

Mrs Awadzi noted that the non-conformance to good corporate governance by both public and private sector businesses is often the cause of their failures.

Therefore, she has advised all organisations, especially indigenous businesses in all sectors of the Ghanaian economy, to demonstrate high standards of corporate governance in their operations.

The deputy governor emphasised that “corporate governance is indeed the bedrock of any modern market economy.”

“Rebuilding our economy post-pandemic will therefore require a new emphasis on strengthening governance and sound management of corporate Ghana and public sector institutions to deliver the desired outcomes for all stakeholder groups.”

She said this at the virtual media launch of the fourth edition of the Institute of Directors-Ghana (IoD-Gh) Corporate Governance Excellence Awards.

The event was on the theme: “Good corporate governance and ethical leadership: An essential requirement for an organisational turnaround”.

Making inferences from the Ghana Statistical Service (GSS), the United Nations Development Programme (UNDP) and World Bank, she underscored that businesses had been badly affected by the COVID-19 pandemic.

Also, while some businesses remained closed, others resorted to redundancy measures, even after the three-week lockdown was lifted.

Mrs Awadzi indicated that though the government’s fiscal and monetary policy interventions helped the private sector mitigate against the impact of the COVID-19, the adverse effects of the pandemic continued to be felt.

The business environment has also remained challenging, with some appreciable level of uncertainty in the economic outlook given the changing dynamics of the pandemic, despite economic activity picking up significantly in the year to date.

“Surely, in these challenging and uncertain times, the quality of leadership and governance is key to shape new visions and ways of doing business that will stand the test of time,” the BoG deputy governor noted.

She went on to say that “in the new normal, good corporate governance will be even more of a critical element of institutional survival, resilience, sustainability.”

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Touching on bank loans to businesses, she said poorly ran businesses are the bane of banks’ non-performing loan portfolios.

This, she noted, threatens the banking system’s viability, which feeds back into stagnated economic growth as banks tighten their credit stance.

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