Supreme Court says central bank’s corporate governance directive lawful

The Supreme Court, by a unanimous decision, has dismissed an action brought by the Association of Finance Houses and held that a corporate governance directive issued by the Bank of Ghana is lawful.

The court said directives of the Bank issued in accordance with Sections 56 and 92(1) of Act 930 do not fall under the ambit of Article 11(1) (c) & (7) of the 1992 constitution of the Republic of Ghana.

It further reiterated that the Bank of Ghana is independent and that its independence is guaranteed under the 1992 constitution. As such, making it subject to parliamentary scrutiny and oversight would upset the BoG’s necessary independence.

Under Section 3 of the Bank of Ghana Act 2002 (Act 612) the Bank of Ghana has independence to maintain price stability and ensure sustainable economic growth.

The Supreme Court said requiring the Bank to present the requirements, regulations and directives it used to regulate and administer Ghana’s financial sector to Parliament would undermine the independence of the BoG and place unnecessary fetters on the efficiency with which it works to create an enabling financial and economic environment.

It said requirements and directives issued by the Bank were administrative actions that it was empowered to craft and issue and that any contrary view would subject the administratively regulatory functions of the Bank to Parliament.

Stagnating effect

The Supreme Court said subjecting the BoG’s management decisions to parliamentary oversight could cause a fossilised approach to what may only require an administrative and regulatory mechanism to correct within the financial sector.