Weak corporate governance continues to be a major contributor to business failures in Ghana, according to Simon Madjie, Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC).
Speaking at a lecture organised by the Chartered Institute of Restructuring and Insolvency Practitioners (CIRIP), Mr. Madjie cited poor oversight, unethical leadership, and flawed decision-making as persistent issues undermining corporate sustainability in the country.
The lecture, held under the theme “Unlocking Business Resilience: How CIRA Empowers Companies to Recover from Distress and Thrive,” highlighted structural weaknesses affecting business performance and recovery in Ghana.
Mr. Madjie explained that aggressive expansion without adequate financial backing often exposes companies to reputational, market, and regulatory risks, ultimately resulting in liquidity crises and delayed payments to suppliers and creditors.
He also pointed to inadequate strategic planning, resistance to change, and external pressures—such as stiff competition and exchange rate volatility—as factors exacerbating business distress.
In response to these challenges, he referenced the enactment of the Corporate Insolvency and Restructuring Act, 2020 (Act 1015), known as CIRA, which was designed to support business recovery and resilience. The Act offers companies a legal framework for restructuring, financial protection, and survival.
“CIRA provides a legal lifeline for viable but distressed businesses, enabling them to avoid collapse during periods of financial difficulty,” Mr. Madjie stated.
Quoting the 2023 PwC Global Crisis Survey, he said: “Ninety-six percent of executives experienced a crisis in the past two years, yet only a third had foundational elements in place to support resilience. This lack of preparedness can turn manageable challenges into severe setbacks.”
He noted that while developed economies have robust business support systems, CIRA marks a significant shift in Ghana’s approach to corporate recovery, prioritising business rescue over liquidation and aligning with global best practices.
“At its core, the Act recognises that failure does not have to be final. It offers a structured pathway for companies to reorganise, secure temporary protection from creditors, and return to viability,” he explained.
Mr. Madjie further emphasised the importance of the Act’s provision for a moratorium when a company enters administration. This temporary legal pause protects the company from creditor actions, giving it space to stabilise.
He urged business owners and managers to engage qualified insolvency practitioners early when signs of financial distress emerge.
Dr. Ishmael Yamson, Board Chair of Scancom PLC (MTN Ghana), also spoke at the event. He noted that many business leaders fail to learn from previous mistakes, allowing insolvency risks to persist. He commended CIRIP for providing practical solutions, saying the lecture not only identified the root causes of insolvency but also offered effective strategies to prevent it and promote sustainable growth in Ghanaian businesses.
Source: GNA
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