The President of the Institute of Directors Ghana, Rockson Dogbega, says blatant disregard for the principles of good corporate governance structures is largely the reasons why most indigenous companies don't survive beyond their founders.
According to him, family relations and sometimes acquaintances often fail to follow laid down procedures, leading to the collapse of companies.
Even though the phenomenon of family businesses collapsing is not unique to Ghana, the frequency with which it occurs to viable entities even when the founders are alive; have been described as worrying.
According to the Institute of Directors, this situation could be attributed to lack of adherence to good corporate governance rules.
Among other things, the revocation of the licenses of some nine local banks and over 400 other financial institutions, have been partly blamed on the disregard for corporate governance structures. Some of these collapsed banks were also run by family relations of the founders.
Speaking at the Institute of Directors Conference and Exhibition in Accra, he advised local companies to abide by the principles of good corporate governance to sustain their investments.
He pointed out for example that most owners of family businesses wish to maintain the family line which is not bad if the qualified family people are made to occupy those positions.
“The challenge is that these business owners do not yield themselves to these practices and principles and that is where the challenge is. I would want to appeal to family business owners, SMEs to accept that there is the need for them to be aware of these principles and practices by getting the right training,” he said.
Mr. Dogbegah stated that growing a global brand requires strict adherence to corporate governance practices to survive anywhere in the world.
“The starting point of sustainability of businesses is about appreciation that there are principles and practices. If the family people themselves can abide by those principles and practices then that is good. There is the family business governance model”.
Meanwhile, the keynote speaker at the conference, Prof. Mervyn King from South Africa, warned that companies that do not follow good corporate governance always struggle to secure funding from the capital market.
Prof. Mervyn King is noted for the King IV Report on Corporate Governance.