Corporate governance must benefit community

Mr. Emmanuel Quao, an official at the Bank of Ghana (BoG), says corporate bodies must not concentrate on only profit making strategies but rather consider the social involvement programmes that will improve the lives of the communities where they operate.


“Successful corporate governance must incorporate relationships between the organisation and communities to achieve key objectives of the company.

“Corporate boards must apply performance, accessibility, fairness, independence, transparency and sustainability to attain a better operation between employees and the general public.

“This is anchored on strengthening management oversight functions, establishing a code to ensure integrity, and ensuring risk management and internal control,” he said.

Mr. Quao was delivering a paper on corporate governance at a two-day workshop organised by the BoG for Financial and Economic Journalists in Accra.

It was aimed at complementing the Bank’s efforts at educating media practitioners on issues relating to monetary and financial policies.

Samuel Danquah Arkhurst, Head, Public Expenditure and Monitoring Unit (PEMU) at the Ministry of Finance and Economic Planning (MoFEP), who presented a paper on reporting on budgets, indicated that government is simplifying the process of budget preparation to allow Ministries Department and Agencies (MDAs) to be more strategic in their approach to budget management.
He said, as part of new approach to budget management, government is planning to implement a programme-based budgeting (PBB) system next year.

The PBB specifications will be fully integrated into the Ghana Integrated Financial Management Information System (GIFMIS), which will enable MDA expenditures to be monitored and accounted for against the PBB Structure.

The programme-based budgeting is a budgeting approach that directly links the planned expenditures to clearly determined results and improved service delivery within the mandate of an organisation.

The PBB exists where the budget is formed around groupings of related services and activities that are all determined to achieve a single strategic purpose called a ‘programme’.

“The lack of performance indicators in MDA budgets also made it difficult to measure budget performance and outputs.

“There has also been an absence of a real strategic focus in MDA budgets, with limited linkage between resource allocations and policy priorities,” Mr. Arkhurst said.

He explained that each programme could therefore be described in terms of the objective it seeks to achieve, the strategies it employs to impact on the objective, the outputs to be delivered in pursuing the strategies, and the inputs used in production of outputs.

PBB provides both a clearer way of describing the purpose of the budget and a framework with which to measure budget performance in meeting the purpose for which it has been implemented.

The current Activity Based Budgeting (ABB) was introduced under the Public Financial Management Reform Programme (PUFMARP) as part of wider PFM reforms, and was intended to bring a stronger performance focus to MDA budgets by linking strategic objectives to outputs and activities.

This approach has been used for preparation of the National Budget since 1998.
However, recent reviews of the budget process and systems have identified limitations with the ABB procedures and systems.

This approach has proved overly-detailed, making the budget cumbersome to prepare and contributing to excessively centralised control over budget implementation.

Government, having considered the experience of other countries that have sought to introduce a stronger policy and performance focus to their budgets, has decided to replace the existing ABB system with a Programme Based Budgeting (PBB) approach, Mr. Arkhurst remarked.