The Bank of Ghana (BoG) is set to issue a bold new directive aimed at reinforcing local governance, board independence, and regulatory accountability in foreign-owned banks operating in the country.
The move seeks to curtail the increasing trend of outsourcing core credit and risk decisions to foreign parent entities, which the central bank warns undermines the integrity of Ghana’s financial system.
Local boards must exercise genuine oversight
Addressing the issue, the BoG made it clear that Ghana-based boards cannot serve as mere “rubber stamps” for decisions made offshore. According to the upcoming directive, all material credit decisions and risk management actions taken in Ghana must be under the genuine authority of local boards and management teams.
Speaking during a meeting with Bank CEOs in Accra, he said, “Core decisions cannot be made in foreign boardrooms and simply ratified in Accra,” BoG Governor Dr Johnson Asiama said
“Such practices not only create unacceptable regulatory blind spots but also weaken institutional capacity and accountability within the domestic financial sector.”
Delegation of key decisions
Under the new rules, any delegation of key decision-making functions to offshore entities must receive prior approval from the Bank of Ghana.
Boards that approve decisions made without proper local deliberation will be considered in breach of the Corporate Governance Directive, specifically Sections 9 and 13, and may face regulatory sanctions.
The directive also tightens expectations around risk management, the Internal Capital Adequacy Assessment Process (ICAAP), and capital planning, insisting that these must reflect local realities in accordance with Basel II Pillar 2 standards.
Where institutions are found to be bypassing local governance structures, directors may be subject to fitness and propriety reviews, particularly if they are seen to be abdicating their fiduciary responsibilities.
Outsourcing Under Scrutiny Ahead of July 2025 Deadline
This initiative is complemented by the BoG’s Outsourcing Directive, which comes into force on 1st July 2025.
Banks are being reminded to review all outsourcing arrangements, particularly those involving data handling, credit evaluation, and operational control, to ensure they comply with supervisory expectations for accountability, data protection, and operational resilience.
The central bank stressed that outsourcing must not become a backdoor for external entities to exercise control without oversight. Institutions that fail to align their structures risk breaching legal and cybersecurity obligations under the Data Protection Act (Act 843) and the BoG Cybersecurity Directive.
Directive is pro-accountability, not anti-foreign
BoG officials were quick to emphasise that the directive is not a stance against foreign investment.
“This is not anti-foreign. It is pro-accountability,” the bank asserted. “We welcome global capital and expertise—but not governance frameworks that sideline the role of Ghana-based directors and executives,” Dr Asiama said.
The regulator warned that current offshore-dominated decision-making not only compromises supervision but also deprives local professionals of the leadership experience necessary to build long-term institutional capacity.
The goal, they said, is a resilient, accountable, and Ghana-rooted financial system—regardless of ownership.
Stronger sector, but vulnerabilities remain
While the BoG acknowledged that the overall resilience of the banking sector is improving—supported by higher profitability and modest asset growth—it warned that systemic vulnerabilities persist.
Chief among them are high non-performing loans (NPLs), capital shortfalls in some institutions, and weak governance in credit decisions.
This context explains why recent measures—including mandatory loan write-offs, a 10% cap on NPL ratios by 2026, and tougher rules on credit reclassification—have been introduced as part of a broader five-part regulatory reform package.
Crypto regulation framework on the horizon
Looking ahead, BoG also revealed that it is working closely with the Securities and Exchange Commission and other partners to finalise a comprehensive regulatory framework for cryptocurrencies and digital assets.
This initiative is aimed at providing legal clarity, managing risks, and enabling responsible innovation.
Banks and financial institutions are being encouraged to prepare now by enhancing Anti-Money Laundering (AML), Know-Your-Customer (KYC), and cyber risk frameworks, particularly for clients involved in digital assets.
The BoG also recommended participation in its regulatory sandbox for piloting crypto-related products and services.
The BoG reiterated its ongoing supervisory focus areas for 2025: governance, AML, cybersecurity, climate risk, and oversight of digital innovation.
The regulator pledged to deepen early warning systems, strengthen risk culture, and intensify board-level engagement.
