The Association of Finance Houses, in November 2020, brought an action at the apex court challenging the BoG’s authority to issue the directive, arguing that it ought to have been issued by Parliament as a Legislative Instrument in accordance with Article 11(7) of the 1992 Constitution of the Republic of Ghana.
On 28th July 2021, the Supreme Court in a unanimous decision dismissed the action brought by the Association of Finance Houses, and held that the Corporate Governance Directive was lawfully issued by the central bank.
The court stated among other things that 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; the Bank of Ghana is independent, and its independence is guaranteed under the 1992 Constitution of the Republic of Ghana. Therefore, making it subject to Parliamentary scrutiny and oversight would be upsetting the necessary independence of the Bank of Ghana.
The Bank of Ghana has been granted independence under section 3 of the Bank of Ghana Act, 2002, (Act 612) to maintain price stability and ensure sustainable economic growth.
Requiring the Bank of Ghana to present the requirements, regulations and directives it uses to regulate and administer the financial sector of the country to Parliament will undermine the independence of the Bank of Ghana and place unnecessary fetters on the efficiency with which the Bank of Ghana works in creating an enabling financial and economic environment.
Requirements and Directives issued by the Bank of Ghana are administrative actions that the Bank of Ghana is empowered to craft and issue.
Any contrary view would subject the administratively regulatory functions of the Bank of Ghana to Parliament and cause a fossilized approach to what may only require an administrative and regulatory mechanism to correct within the financial sector.
The 1992 constitution did not intend the Bank of Ghana’s internal workings and regulatory responsibilities to be under the constant supervision of Parliament as this will introduce the danger of slowing and grinding the work done by the Bank of Ghana to a gradual halt.
Subjecting the Bank of Ghana to undue Parliamentary oversight will upset the necessary independence of the Bank of Ghana and undermine the system of separation of powers and regulatory functions of the Bank of Ghana, as enshrined in the 1992 Constitution.