Financial Analyst and Banking Consultant, Dr. Richmond Atuahene has outrightly rejected calls for the revocation of the term limit imposed on Chief Executive Officers (CEOs) and Managing Directors (MDs) of regulated financial institutions.
The banking consultant who also has expertise in Corporate Governance believes these calls are out of place and very premature given the origin of the Bank of Ghana Corporate Governance directive.
The Corporate Governance Directive on Revised Transitional Provisions for Banks issued by the Bank of Ghana in September 2018 introduced a term limit for bank chiefs. Per the new directive, CEOs and MDs of Specialized Deposit-Taking Institutions, and Financial Holding Companies are allowed a term limit of four years with an opportunity for two terms additional extension.
“The term of office of a Managing Director or Chief Executive Officer (MD/CEO) of a regulated financial institution shall not be more than four (4) years and may be renewed for additional two (2) terms only,” section 2(a) of the directive cited by The High Street Journal read.
A few years after coming into force of this directive, lawyers, business, and thought-leaders such as Yaw Nsarkoh, Prof. H. Kwasi Prempeh, and others have expressed concern about the relevance of this term limit.
While Yaw Nsarkoh is wondering why the legislation hasn’t been scrapped, Prof. H. Kwasi Prempeh strongly believes that the banks should have challenged such a directive in court.
Amidst these calls, Dr. Richmond Atuahene is convinced the positions of the critics of the directive are far-fetched. He argues that the critics have failed to recognize the impact of poor corporate governance practices on some banks, especially local banks.
In an interview with The High Street Journal, Dr. Atuahene further revealed the role weak corporate governance played in crippling the financial sector hence necessitating the 2017 banking sector cleanup. He also revealed how some local banks are currently struggling due to weak corporate governance structures.
He also maintains that the term limit considers the socio-cultural practices, where bank chiefs become thin Gods after staying in office for an extended period. The banker with years of experience says such bank chiefs are able to compromise or undermine the boards and take parochial decisions to the detriment of the banks.
With these arguments, he believes that the campaigners for scrapping the term limit are failing to appreciate the context of the directive.
“I think it’s too early for them to be saying that we should. We haven’t been practicing for 10 years. We need to practice something for more than 10, or 15 years so that we can have empirical evidence of what is in that. So those who are saying it should be mindful of where we are coming from and where we are. Not because of few people we should say that the director should not have a term,” he explained to The High Street Journal.
He added, “The shareholders have to elect the board and elect the board chairman and everything. But the people when they have been elected to position. They become thin gods. I can mention names upon names.”
In his view, it is embarrassing and sad that no Ghanaian indigenous bank is found in the list of the top 100 banks in Africa. He attributes this situation to the poor corporate governance practices in these local banks.
He indicates that while Nigerian banks are making names on the continent due to their strict corporate governance structures which include terms limits, Ghanaian local banks are failing to make the list of the top 100 in Africa.
“There is no Ghanaian bank. There is no Ghanaian bank. Not because of DDEP. I can quote one bank. The nearest one in Ghana is ABSA Ghana,” he said. Checks by The High Street Journal reveal that according to the ranking by the African Business, ABSA Bank Ghana ranked 92nd out of 100 in 2024 and 93rd in 2023.
He emphasized the importance of stringent corporate governance principles to businesses which makes it inevitable.
“And the corporate governance is the soul of business. They direct, control, manage, and guide strategic agendas. Unfortunately. When you leave them. Ghanaians by their nature are corrupt. If you tell him that he is there till God comes. They will collapse the institution all by themselves. Even with the regulators supervising them,” he argued.
Dr. Atuahene is therefore pushing back against calls for the scrapping of the corporation governance directive that imposes term limits on bank chiefs. He insists that Ghana needs more time to entrench these reforms and ensure their effectiveness.
