The Central bank, Bank of Botswana (BoB) says it is disappointment with the recent media reports and commentary on its governance, following a submission by the Chief Executive Officer Duncan Majinda of the Botswana Accountancy Oversight Authority (BAOA) to the Parliamentary Committee on Statutory Bodies and State Enterprises.
Led by Governor Moses Pelaelo, the bank this week stated that it should be noted that the Bank of Botswana is not a company; and that it is a statutory body whose governance structures are embedded in law.
The bank responded through a press release that it reassures the public that all the governance structures, functions and operations it has adopted and follow, adhere to principles and operational standards that are fully compliant with the Bank of Botswana Act, and other relevant ancillary legislation, as well as, in general, well established international governance practices for central banks.
The bank further stated that the law specifies the mandate of the Bank, the functions to be carried out in pursuit of the mandate, the institutional arrangements and governance structures, including the appointment of senior Bank staff, Board members, and accountability frameworks for operational and financial reporting. In this regard, throughout its existence, the Bank has been and continues to be fully compliant with its own statutes.
In the report, BAOA had earlier stated that BoB’s corporate governance practices are well below expected best international practice. Added is that the situation was exacerbated by the Bank’s governance structure which combines the roles of the Governor and Chairman of the Board.
“And worse of all, without any mitigation like a strong group of independent non-executive directors in its Board organized by a lead director. The Board does not appoint or participate in the appointment new director,” reads the report.
Further stated in the report is that the performance evaluation of the board that is appointed by the Minister was not done, adding that the performance appraisal of the Governor was not done. “Perhaps the most important committee in an entity, the audit and risk committee was also not appropriate constituted. The Chief internal Auditor was not appointed in accordance with good corporate governance practices,” reads the report.
This week, the bank stated that Central banks perform special functions and have responsibility for “public goods” as determined and delegated by national governments on behalf of citizens. It is, therefore, not unusual for central banking law (as promulgated by Parliament) to bestow the determination of the governance arrangements on the national leadership. Added in the statement is that in virtually all central banks in the world, even those with a most recent statute review, the Governor and Deputy Governors are appointed by the executive leadership of the country (in the case of Botswana, as provided for by Section 13 of the Bank of Botswana Act); and in about 80 percent of central banks across the world, the Governor is Chairman of the Board.
“The exceptions would normally be central banks that have dual board arrangement involving a supervisory and a policy board and, in those situations, the Governor would invariably chair the policy board,” reads the statement.
BoB Governor Pelaelo further stated that good governance is well-entrenched at the Bank of Botswana, in terms of legal compliance, adherence to applicable principles and standards for the discharge of central banking responsibilities, and transparent accountability frameworks. He said it follows that de facto compliance and practice of good governance does.