Critical Perspectives No. 10 [The Persistent Corporate Governance Deficit in the Ghanaian Public Sec
01 September, 2002
Critical Perspectives No. 10 [The Persistent Corporate Governance Deficit in the Ghanaian Public Sector: An Agenda for Reform]
The Persistent Corporate Governance Deficit in the Ghanaian Public Sector: An Agenda for Reform.
By H. Kwasi Prempeh
The recent corporate/accounting scandals in the United States, involving Enron/Arthur Andersen and WorldCom (among others), have revived academic, governmental, and investor interest in the subject of corporate governance, only a few short years after the East Asian crises of the late 1990s propelled the term corporate governance from the relative obscurity of academia and the corporate boardroom onto the international development agenda. Although popular familiarity with and usage of the term in Ghana is even more recent and still quite limited, Ghana, as Kwasi Prempeh points out in his essay, has, in fact, been living with a costly corporate governance problem since the 1960s. Normally when corporate governance is discussed, the focus is on companies in the private sector—and Prempeh has had occasion, in another CDD-Ghana publication, to survey the corporate governance landscape in the Ghanaian private sector (see Briefing Paper Vol. 3 No. 4, January 2002). In this issue of Critical Perspectives, however, Prempeh focuses on the corporate governance deficit in state-owned enterprises, of which Ghana continues to boast quite a number, despite the Ghanaian government’s implementation of a divestiture or privatization programme since the 1980s. Among the reasons Prempeh gives for focusing on the state enterprise sector is that “habits of governance learned in the state enterprise sector have spillover effects on the nature and quality of governance in the private sector and national government.” Although Prempeh does not conceal his preference for private over state ownership of business, his essay proceeds on the realpolitik assumption that neither the Ghanaian government nor the public appears willing to give up on the idea of state ownership of business, now or in the foreseeable future. That being the case, it is Prempeh’s view that it would be irresponsible not to take the issue of corporate governance seriously. Prempeh points out that, although the ideological context of state enterprises has changed significantly from the “socialist” heydays of the 1960s when state enterprises were the order of the day in Nkrumah’s Ghana, the model of corporate governance for state enterprises in Ghana remains practically unchanged. Today, like the 1960s, the governance of Ghana’s state enterprises is dominated by politics, patronage, and populism, with considerations of merit, competitiveness, and efficiency still relegated to secondary importance at best. Prempeh contends that the persistence of this defective model of corporate governance is largely responsible for the continuing under-performance of the state enterprise sector and the financial hemorrhaging and corruption associated with that sector. As the title of the essay suggests, the discussion is not limited to raising concern and defining the scope or nature of the problem. The essay is forward looking. Thus, Prempeh puts forth an “agenda for reform” consisting of concrete actions, including policy and legislative interventions, that might help reverse the corporate governance deficit in the Ghanaian public sector.