Since March, 2016, the three topmost positions at the Bank of Ghana (BoG) have witnessed an unprecedented change, with two governors resigning and new ones appointed in this spate of two years.
Over the period, two deputy governors have also resigned and the latest vacancy, occasioned by the resignation of the former Second Deputy Governor, Dr Johnson Asiama, yet to be filled.
The first to resign within the two-year period was Dr Henry Kofi Wampah. He stepped down on March 31, 2016 – five months to his retirement date – citing the need to “give enough room for my successor to settle down before we get to the (December) elections.”
His successor, Dr Abdul Nashiru Issahaku, also resigned on March 31, 2017 (three years to the end of his four-year contract). He was subsequently replaced by the current Governor, Dr Ernest Addison, formerly of the African Development Bank (AfDB).
In the case of the deputies, Dr Asiama, who replaced Dr Issahaku as Second Deputy Governor, has also just resigned, two years to the end of his contract. In between the resignations, Mr Millison Narh retired in July 2017 as First Deputy Governor, paving the way for Dr Maxwell Opoku to be appointed.
Thus, the top hierarchy of the BoG is now occupied by new faces and that has been capped by an equally new board which was inaugurated in August, last year.
For the appointing authority, this is probably the new set of trusted skills needed to aid the government in its efforts to transform the economy. For me, these happenings and their outcomes (maybe coincidental) set a worrying precedent that must not be allowed to fester.
This is why.
While one cannot determine how people exit their positions, the circumstances surrounding the recent resignations at the BoG should be of concern to all well-meaning Ghanaians.
In the case of Dr Wampah, it was alleged that his handling of the new foreign exchange rules in 2014 and the microfinance bust in 2015 through to 2016, strained relations between him and the government at the time, leading to his retirement.
Similar allegations bordering on strained relations, lack of trust and withholding of information surfaced after Dr Issahaku tendered in his resignation last year. Others even alleged that he was seen openly campaigning for the National Democratic Congress (NDC) in the lead-up to the December 2016 election and that had subsequently made him unfit to occupy a position as sensitive and impartial as Governor of BoG under a competing political administration.
Regarding Dr Asiamah, his lawyer, Mr Victor Kojoga Adawudu, is replete with allegations that his client did not resign voluntarily but was shoved off the position.
“Things were not as it was; it was becoming more unfriendly,” he told Accra-based JOY FM regarding Dr Asiama’s resignation on January 1.
BoG not arm of government
These are frightening allegations that must not be swept under the carpet, especially against an independent and non-partisan institution such as the BoG.
Although they remain what they are – mere allegations, they add to growing fear of political interference in the affairs of the central bank and that begs the question if the BoG is gradually being reduced to another arm of the government.
More so is the infamous entrenchment of this despicable culture, where a new political administration occasions a change in leadership in almost every state-owned enterprise (SOE). Such a trend thwarts the flourishing and sustenance of technical skills, erodes institutional memory, undermines performance and instills, virtually, an eight-year cycle where, irrespective of a person’s capacity and delivery, he/she will be replaced once a new administration takes office.
This is mediocre. Sadly, however, we have, over the years, failed to curb it in the public and civil service and the fear of it creeping into a sensitive institution, such as the BoG, is now too glaring to be ignored.
But we must be mindful, given that the BoG is a critical and significant economic management institution in the country. Any tainted practice in the bank will discredit and turn an honourable institution into an ignoble one incapable of enforcing its own rules.
The issue even becomes scarier when one examines the sensitive nature of the role of the BoG in relation to the power-seeking nature of political leaders. While politicians will always look to winning the next election, central banks the world over are to ensure that fiscal and monetary policies are properly aligned to help create a conducive economic environment that guarantees sustained-low inflation, a stable currency, low interest rates and a sound banking sector capable of financing public and private sector projects for entrepreneurial ingenuity to flourish.
Thus, the policies of central banks, including Ghana’s, are long-term minded, hence the need to protect and preserve their independence and credibility.
This explains why despite being appointees of the President, the BoG Governor, deputies and the institution itself are supposed to be independent, free from any control. Beyond the constitutional requirement, this independence gives the three top brass the needed latitude and clout to properly exercise the bank’s authority as a check on fiscal operations by the government.
This is even more critical in Ghana, where monetary policy has virtually become a slave to fiscal policy: excessive public sector expenditures on the back of binge borrowings have always led to rising inflation, costly interest rates, cedi depreciation and high non-performing loans – the four forces repeatedly fought by the BoG.
Thus, to silently push a government’s interest, in the form of an appointment on the BoG, will amount to exacerbating this challenge. Interestingly, the greatest victim will not be the politicians but the economy.
The way forward
Ideally, central banks should exist as monetary authorities, fully insulated from party politics and having the free will to properly put fiscal operations in check. This explains why the tenure of the Chairman of the Federal Reserve Board of the United States of America overlaps that of the President, who is the appointing authority.
The same applies in many countries, including Ghana, where the governor and his two deputies are appointed to serve a period of four years.
Unfortunately, however, it appears that the usual mistrust and earmarking of people for appointments by politicians in power is finding their way into who becomes governor and/or deputies at the BoG. This should not be allowed to fester, especially given our history of party supporters taking over public institutions (including public places of convenience and tollbooths) after their parties have been voted into power.
This creates the impression that the BoG has been politicised and, therefore, its decisions are extensions of the government of the day. It also fans the perception that a governor or deputies not appointed by a sitting government can work against that government, contrary to the sacred and impartial responsibilities of those three people.
These perceptions result in erosion of the confidence and trust that the general public and the international community should have in this delicate institution that has been tasked with the onerous responsibility of, among others, deciding how much cedis should be printed, circulated or mopped.
Needless to say that the BoG deserves better than this. The earlier we curbed it, the better for the long-term good of the nation and the economy in particular. – GB