On 15 August 2021, the Supreme Court of Ghana delivered its decision in Association of Finance Houses v Bank of Ghana. The case presented a critical constitutional question: whether the directives issued by the Bank of Ghana (BoG) to regulate the activities of finance houses had a valid legal foundation, and whether the court's intervention was the appropriate remedy. This paper examines what the court decided, what Justice Kulendi's concurring shot accomplished, and whether it cleared or knocked the bar.
A. Introduction — The Constitutional Framework
The legal framework for this dispute begins with Article 11 of the 1992 Constitution. Article 11(1)(c) identifies "orders, rules and regulations made by any person or authority under a power conferred by this Constitution or any other law" as part of the laws of Ghana. Article 11(7) provides that any such instrument must be laid before Parliament and is subject to annulment by Parliament.
The significance of these provisions in the context of central bank regulation cannot be overstated. When the Bank of Ghana issues directives that bind finance houses — imposing obligations, restricting activities, and attaching penalties for non-compliance — it is exercising a power that has legal consequences for private parties. The question whether such directives constitute "subsidiary legislation" within the meaning of Article 11 goes to the heart of whether Parliament has the oversight role over BoG's regulatory activities that the Constitution contemplates.
The distinction matters in practice. If BoG directives are subsidiary legislation under Article 11, they must be laid before Parliament. If they are merely administrative instruments — internal guidance or operational directions — the parliamentary check does not apply. Finance houses targeted by such directives have a strong interest in the former characterisation; the Bank of Ghana, wishing to maintain flexible and rapid regulatory capacity, has an interest in the latter.
When a court resolves a constitutional question on grounds of convenience rather than legal principle, it trades short-term clarity for long-term uncertainty. The question it declined to answer will return — perhaps in a form less amenable to a convenient solution.
B. The Supreme Court Case
The Association of Finance Houses challenged the BoG directives on the basis that they lacked legal authority and that the Bank had exceeded its statutory powers in issuing them. The association argued that the directives were either subsidiary legislation — in which case they had not been properly laid before Parliament — or that they were ultra vires the enabling statutes under which the Bank purported to act.
The Bank of Ghana's position was that the directives were lawful exercises of its supervisory and regulatory functions under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), and that they fell within the administrative authority conferred on the Bank without requiring the formality of parliamentary scrutiny.
The Supreme Court's majority resolved the matter in a manner that did not fully engage with the constitutional question. Justice Kulendi delivered what has been described as a significant concurrence — one that addressed the substance of the constitutional issue more directly than the majority, but which has itself attracted criticism for the reasoning deployed.
C. A Critical Analysis of Justice Kulendi's Reasoning
Justice Kulendi's shot at the constitutional question is admirable in its ambition, but it raises several difficulties of principle.
Lack of legal basis. The first difficulty is that the conclusion reached — that the BoG directives were valid regulatory instruments — was not derived from a systematic analysis of the statutory provisions. Justice Kulendi cited the Bank's supervisory mandate in broad terms without tracing a clear line from that mandate to the specific directives challenged. In constitutional adjudication, identifying the general purpose of an institution is not the same as identifying the legal source of a particular exercise of power.
Reliance on convenience. The second difficulty is that elements of the reasoning appear to rest on what the Bank of Ghana needs to do its job effectively, rather than on what the law authorises it to do. The fact that modern central bank regulation requires flexibility and speed is a policy argument, not a legal one. Courts have consistently held — and the Supreme Court's own jurisprudence supports — that convenience cannot create power where the statute does not provide it.
Misapplication of the separation of powers. Justice Kulendi invoked the separation of powers as a reason for judicial deference to the Bank's regulatory choices. The separation of powers is, however, a two-edged principle. It counsels restraint in second-guessing the Bank's policy choices, but it does not counsel restraint in determining whether the Bank acted within its legal authority. That determination is emphatically a judicial function. To decline it in deference to the Bank is not to respect the separation of powers; it is to abdicate the judicial role.
Failure to apply the Bombelli test. In determining whether an instrument constitutes subsidiary legislation for the purposes of Article 11, the applicable standard requires the court to assess whether the instrument has the character of law — whether it creates rights, imposes obligations, and has external legal effect on persons outside the issuing body. The directives at issue plainly had this character. They imposed obligations on finance houses, restricted their activities, and attached regulatory consequences to non-compliance. The analysis required by the Bombelli test was not applied with the rigour the constitutional question demanded.
The absurdity argument. It has been suggested that characterising all BoG directives as subsidiary legislation would be absurd, because the Bank issues operational communications regularly and laying each before Parliament would be unworkable. This argument misunderstands the question. The issue is not whether every BoG communication is subsidiary legislation, but whether directives that have the character of binding legal rules — creating external legal obligations for regulated entities — meet the threshold. The absurdity argument proves too much by proving nothing about the directives actually challenged.
D. The Statutory Analysis — Act 612 and Act 930
A careful analysis of the Bank of Ghana Act, 2002 (Act 612) alongside Act 930 reveals a structural tension that neither the majority nor Justice Kulendi's concurrence fully resolved.
Section 56 of Act 612 confers on the Bank a general regulatory power over banking and deposit-taking. Act 930, which governs specialised deposit-taking institutions including finance houses, provides in section 92 a more specific framework for the issuance of directives to regulated entities. The relationship between these two statutory bases is not simply additive — the existence of the more specific provision in Act 930 raises the question whether section 92 defines and limits the directive-issuing power for finance houses, or whether the Bank can also rely on the broader powers in Act 612.
If section 92 of Act 930 is the operative provision, then its conditions and limitations are material. If those conditions were not met — if the directives were not issued in the manner or for the purposes Act 930 contemplates — the directives lack statutory authority regardless of the Bank's general mandate. The case required engagement with this structural question. It did not receive it.
The distinction between the two statutory bases is not merely technical. It goes to whether the legislature, in enacting Act 930, intended to create a comprehensive and exclusive framework for regulating specialised deposit-taking institutions — in which case the Bank's reliance on the broader Act 612 for directives to those institutions is impermissible — or whether the two Acts operate concurrently.
E. Conclusion — The Bar Remains
The standard set by Atuguba JSC in earlier constitutional jurisprudence — that the court's constitutional role demands engagement with the text, structure, and underlying principles of the Constitution, not merely with the practical consequences of alternative interpretations — was not met in the handling of this case. Justice Kulendi's shot was aimed at a real target. The question whether BoG's extensive regulatory activity rests on adequate legal foundations is not academic; it has consequences for the rule of law, for the position of regulated entities, and for the democratic oversight that Parliament is constitutionally required to exercise.
Justice Taylor's principle, that a court which resolves constitutional questions on narrow or avoidance grounds provides no lasting guidance for the future, is apposite here. The constitutional question raised by the Association of Finance Houses has not been settled. It has been deferred. The bar has not been cleared; it has been left in place, to be encountered again the next time the Bank of Ghana's regulatory reach is challenged.
For practitioners advising regulated entities, the lesson is that the constitutional arguments remain available. The directives-as-subsidiary-legislation point has not been conclusively decided against a future applicant. For the Bank of Ghana, the lesson is that the legal foundations of its regulatory instruments deserve closer scrutiny — not because the Bank's objectives are illegitimate, but because objectives cannot supply the legal authority that only statute can provide.