Amid the debate over the Bank of Ghana’s (BoG) Corporate Governance Directive imposing a term limit on directors of banks, former Power Minister, Dr. Kwabena Donkor, has thrown his full support behind the Central Bank.
The corporate governance consultant maintains that no director should stay at the top long enough to weaken accountability or stifle fresh ideas.
Speaking in an interview with The High Street Journal, Dr. Donkor said the central bank’s directive is long overdue, especially in an industry where some executives and board members cling to power for so long that their banks begin to feel like private estates.
“Ten Years Is Enough to Make Your Mark”
Dr. Donkor explained that there are two categories of directors: executive directors and board directors. According to him, anyone rising to the level of executive director must first be cleared by the BoG. For board directors, he argues that they cannot serve beyond 10 years, including managing directors who sit on the boards.
Justifying his stance on why directors cannot be maintained for more than 10 years. He insisted that 10 years is enough for any director to make any significant change in the entity.
“You cannot be on a board for more than 10 years. And if you are the managing director and therefore a board member, the chief executive, do you have to be in the same office for more than 10 years? 10 years is enough for you to leave your mark,” he noted.
He adds that nothing stops a managing director from taking their experience elsewhere after hitting the limit, but staying beyond a decade in the same seat does more harm than good to the institution and to the leader’s own effectiveness.
Why Staying Too Long Is Dangerous
Dr. Donkor warned of the risks that come with overstaying in leadership positions. According to him, familiarity, weakened accountability, and complacency slowly creep in when an executive remains in office for too long.
He adds that, in some instances, people have taken banks to be their personal property, arguing that accountability diminishes because the occupant of the position becomes too familiar.
The former Member of Parliament continued that the banking environment changes quickly, and institutions need new thinking at the top to stay competitive. Leaders who remain in the same role for too long, he argued, eventually lose their edge.
“There is a risk. People have taken banks to be their personal property. Accountability diminishes because you become too familiar. Everybody goes to you. And your effectiveness diminishes over 10 years in the same position,” Dr. Donkor recounted.
He further stated, “The operating environment is very dynamic. And so from time to time you need to bring new ideas into the same business. And if you have a managing director, 10 years is more than enough to make a mark. Yes, so I support the Bank of Ghana.”
A Divided Industry -Bankers Threaten Legal Action
Dr. Donkor’s endorsement of this new corporate governance principle comes at a time when many players in the banking industry strongly oppose the central bank’s directive.
Some bankers argue that the rule is too restrictive and interferes with private governance structures and also threatens to stifle the industry of experience. Industry associations have even hinted at a possible legal challenge, insisting the directive overreaches.
But Dr. Donkor believes the central bank is right to act, especially after the banking sector crisis revealed weaknesses in governance and oversight.
