Former Executive Vice President of Unilever Ghana and Nigeria, Yaw Nsarkoh has questioned the Bank of Ghana’s policy of a strict term limit on Chief Executive Officers (CEOs) and Managing Directors (MDs) of regulated financial institutions, igniting a debate for a relook at the directive.
The business and thought leader in Ghana cannot fathom why a highly performing bank chief should be forced to leave the scene after exhausting the Central Bank’s stipulated term limit, a situation he finds very disruptive and undermines meritocracy.
The Bank of Ghana introduced the term limit for bank chiefs in 2018 as an aftermath of the Banking Sector cleanup.
A Corporate Governance Directive on Revised Transitional Provisions for Banks, Specialized Deposit-Taking Institutions, and Financial Holding Companies directed that the term limit of a bank chief should be four years with an opportunity for an extension not beyond two additional terms.
“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 issued in September 2018 and cited by The High Street Journal read.
In Yaw Nsarkoh’s view, the Bank of Ghana has no business in dictating the term limit of CEOs and MDs of banks where there is the existence of boards and hence calling for the scrapping of what he describes as “intrusive legislation”.
“Why does BoG impose term limits on even high-performing CEOs of Banks? Should this not be left to boards and their stakeholders?,” he queried in a Facebook post cited by The High Street Journal. He further indicated, “Is it time to scrap such intrusive legislation?”
Other critics argue that a limit on the tenure of bank CEOs irrespective of their performance undermines the authority of boards and shareholders. In their view, the banks’ boards are well-equipped to evaluate the competence of their CEOs and determine their tenure based on performance and the strategic needs of the institution.
Commenting on the situation, Executive Director of Ghana Center Democratic Development and an astute lawyer, Prof. H. Kwasi Prempeh maintained that it is about time the banks challenge such a regulation in court.
“Wonder why no bank has challenged this in court,” he said.
The debate has been ignited that the BoG’s policy is not only unnecessary but detrimental. Many are now calling for an urgent review of this “intrusive legislation,” with stakeholders arguing that Ghana’s banking sector deserves leadership policies rooted in trust, meritocracy, and global best practices.
