The Inconvenient Truth: Institutions rarely collapse because of bad laws. They collapse when their guardians stop guarding

Ghanaian public institutions frequently face challenges that threaten their stability and effectiveness. This article argues that the primary cause of institutional collapse is not inherently flawed legal frameworks, but rather the failure of their designated guardians—ministers, boards, and management—to uphold their oversight and fiduciary duties. Despite robust legislation like the Public Financial Management Act, 2016 (Act 921) and the State Interests and Governance Authority Act, 2019 (Act 990), a persistent gap exists between legal mandates and practical implementation. This leads to pervasive governance failures, including corruption, political interference, and a lack of accountability, ultimately undermining public trust and hindering national development.

In the life of every nation, critical self-reflection is essential, particularly when public institutions, designed as pillars of national development, falter. The prevailing narrative often attributes the woes of such institutions to inadequate laws. However, a closer examination reveals a more inconvenient truth: institutions rarely collapse because of bad laws; they collapse when their guardians stop guarding. This assertion posits that the strength of a legal framework is only as effective as its enforcement and the integrity of those entrusted with its implementation.

Ghana, like many developing nations, possesses a comprehensive array of statutes and regulations aimed at ensuring good governance, transparency, and accountability within its public sector. Yet, despite these well-intentioned legal instruments, instances of institutional inefficiency, corruption, and outright failure persist. This article delves into the Ghanaian context to explore how the disconnect between a robust legal architecture and the practical failures of oversight, accountability, and ethical leadership by institutional custodians—from political appointees to board members and management—is the true catalyst for the erosion and eventual collapse of public institutions.

The legal and regulatory landscape governing public institutions in Ghana is designed to promote fiscal discipline, transparency, and accountability. Central to this framework is the Public Financial Management Act, 2016 (Act 921), which regulates all aspects of public sector financial management, clearly defining the roles and responsibilities of stakeholders and implementing strict measures for accounting and auditing of public funds. This Act mandates comprehensive accounting and auditing practices, periodic reporting, and the establishment of audit committees within Ministries, Departments, and Agencies (MDAs), fostering a culture of transparency and external scrutiny.

Further strengthening this framework is the State Interests and Governance Authority Act, 2019 (Act 990), which established the State Interests and Governance Authority (SIGA). SIGA is mandated to oversee and guide the operations of Specified Entities (State-Owned Enterprises, Joint Venture Companies, and Other State Entities) to ensure their efficient operation, adherence to high standards of corporate governance, and meaningful contribution to Ghana's socio-economic development. The Companies Act, 2019 (Act 992) also applies to state-owned entities that are registered as companies, outlining directors' fiduciary duties, including the duty of care and skill, and the obligation to avoid conflicts of interest. Complementing these are the Audit Service Act, 2000 (Act 584) and Article 187 of the 1992 Constitution, which establish the independent Auditor-General to audit all public accounts and report findings to Parliament, providing a crucial external oversight mechanism.

Despite the existence of these comprehensive legal frameworks, the functional impact of laws like the Public Financial Management Act has been weak, leaving Ghana's public financial management system vulnerable to abuse and transgressions. This weakness stems largely from governance failures, which manifest in various forms across public institutions. One significant issue is the politicization of public sector appointments, where loyalty often trumps merit, leading to heads of departments turning a blind eye to wrongdoing to protect political patrons. This undermines the independence and effectiveness of institutional boards and management, who are legally mandated to ensure the entity's objectives are met for the good of the Ghanaian people.

Boards of State-Owned Enterprises (SOEs), for instance, are often pressured into questionable transactions, and a lack of clear fiduciary accountability can arise, especially when they are not explicitly bound by the duties and responsibilities of directors as stipulated in the Companies Act, 2019 (Act 992) for privately registered companies. The 1992 Constitution, under Article 284, explicitly mandates board members to avoid conflicts of interest, a principle reiterated in the National Corporate Governance Code, 2022. However, the consistent failure to enforce these provisions leads to a serious accountability deficit in public sector management, resulting in corruption, inefficiencies, and ineffectiveness.

Furthermore, oversight bodies, while legally empowered, often face challenges in ensuring compliance and implementing recommendations. The Ghana Audit Service, established under the 1992 Constitution and operationalized by the Audit Service Act, 2000 (Act 584), is independent in its functions and audits all public accounts, submitting annual reports to Parliament. However, there are often delays in legislative scrutiny of issues raised by the Auditor-General, and audit recommendations are not always effectively followed up on or tracked by the responsible MDAs. This systemic failure to enforce existing laws and hold individuals accountable creates an environment where mismanagement and corruption can thrive, as evidenced by various high-profile scandals involving IT project failures and financial mismanagement that have resulted in wasted public funds.

The State Interests and Governance Authority (SIGA) was established to address fragmented oversight and provide a unified framework for fiscal discipline and good corporate governance. Its functions include developing a Code of Corporate Governance and ensuring adherence to annual performance contracts. However, the effectiveness of SIGA, like other oversight bodies, hinges on the political will to enforce its directives and the commitment of institutional guardians to adhere to good governance practices, rather than merely having the legal provisions in place. The persistent challenges, including bureaucratic inefficiencies, corruption, and insufficient training for public officials, undermine the full realization of public financial management objectives.

The Ghanaian experience underscores a critical lesson: the mere existence of robust laws is insufficient to guarantee institutional integrity and performance. The true determinant lies in the unwavering commitment of those entrusted with their guardianship. Practitioners in public law, corporate governance, and accountability must therefore shift focus from solely advocating for new legislation to rigorously enforcing existing frameworks. This requires a concerted effort to strengthen accountability mechanisms, insulate public institutions from undue political influence, and foster a culture of ethical leadership and diligence among ministers, board members, and management.

Moving forward, legal professionals should champion initiatives that enhance the independence of oversight bodies, ensure timely and effective follow-up on audit findings, and promote continuous capacity building for institutional leaders on their fiduciary and statutory duties. The call to action is clear: to safeguard public institutions and ensure they serve their intended purpose, Ghana must prioritize the full and effective implementation of its governance principles, transforming them from mere guidelines into legally enforceable standards that demand accountability from every guardian of the public purse. This vigilance is crucial for sustainable national development and maintaining public trust.