RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE

RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE 28 SEPTEMBER 2009 HARARE, ZIMBABWE By : Shepherd Shonhiwa Chief Executive, Gateways Business Consultants

CHANGE PRE-REQUISITE
“ You have to be prepared to leave sight of land and sail afar to discover new shores”

OVERVIEW
Time for change = NOW!
Why Corporate governance?
Zimbabwe business environ profile
Corporate governance pillars
Corporate governance systems
CG code implementation process
Adopt a “wet baby” attitude!

CORPORATE EVOLUTION
19 th Century =
20 th Century =
21 st Century =
Century of the Entrepreneur. Establishment of Corporation Concept.
Century of Management.
Management theories/gurus.
Century of corporate governance.
Focus on legitimacy & effectiveness.
Checks and balances on Management Power.

CORPORATE EVOLUTION (continue)
To Prevent:
WORLD FINANCIAL CRISIS - 2008/9
LERMAHN BROTHERS Inc - 2008 USA
USA AUTO INDUSTRY - 2008
ENRON ) -
WORLDCOM ) -
REGAL BANK - SOUTH AFRICA - 2001
LEISURENET - SOUTH AFRICA - 2002
A.N.G. BARING BANK - MALAYSIA - 1998
BANK OF COMMERCE & CREDIT - 1990s
2002 USA

CORPORATE GOVERNANCE : is concerned with holding the balance between economic and social goals; between individual and commercial goals …… the aim is to align as nearly as possible the interests of individuals, corporations and society. Sir Adrian Cadbury Corporate Governance Overview 1999 World Bank Report

VALUE OF GOOD CORPORATE GOVERNANCE
Prevent management sins of greed/sloth and fear - McKinsey Survey 2000.
Good governance = good business management.
Investors pay premium for well governed company.
Board practices = financial performance.
Management enhances Shareholder value.
Preempts shareowner activism.
Jim Wolfensohn, World Bank President “ The proper governance of companies will become as crucial to the world economy as the proper governing of countries”

“ If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere”
Arthur Levitt, former chairman, US Securities & Exchange Commission.

EXTERNAL BOARDROOM VIEW OF ZIMBABWE
Inherent long term economic potential
Undervalued assets
Innate skilled labour
Low entry barriers
High country risk for investment
No rule of law
No property rights
Excessive government controls
Patronage system prevalent
Unstable economy
Poor corporate governance
Unclear investment policies
Excessive brain drain
Political instability

Why Corporate Governance System in Zimbabwe?
Avoid “Big Brother” global spotlight
Improves unsolicited governance rating
Re-kindles FDI interest
Impacts on cost of capital
Reduces cost of doing business
Facilitates economic recovery
Enhances brand name Zimbabwe
Defines Government-Business relations

ZIMBABWE CORPORATE GOVERNANCE REVIVAL TEMPLATE
Build the ship while sailing – URGENT
Boards & Directors to change first
Marshal all stakeholders support
Agree common approach and interests
Don’t re-invent the wheel
Define project critical path upfront
Conform to timeline and procedure
Business sector drives/owns the process
Do not politicize Corporate Governance

CORPORATE GOVERNANCE REVIVAL IN ZIMBABWE “THE PLAYERS”
Private sector committee at helm
Neutral professional secretariat
Moral and philosophical political support
Forums for critical corporate governance areas
External advisory reference point
Keep end goal in mind
Hype up continual by-stander interest= communication
Produce fit-for-purpose code initially.

CODE OF GOOD CORPORATE PRACTICES & CONDUCT
Must apply to:
ZSE listed companies
All financial institutions
State owned commercial enterprises
All formal organizations encouraged to conform
Guiding principle = “COMPLY OR EXPLAIN”

SEVEN CHARACTERISTICS OF GOOD CORPORATE GOVERNANCE
Corporate Discipline : Senior management commitment to universally accepted behaviour.
Transparency : Candid, accurate and timely information.
Independence : Minimising potential conflicts and dominance.
Accountability for Board and management decisions.
Responsibility : Board responsiveness to all stakeholders.
Fairness : Balanced systems for all stakeholders.
Social Responsibility : Responsiveness to social issues.

PARAMETERS OF CORPORATE GOVERNANCE
Board and Directors responsibilities.
Accounting and Auditing practices.
Internal Audit, Control, Risk management Functions.
Integrated Sustainability Reporting.
Compliance and Enforcement guidelines.

BOARD COMPOSITION
Effective leaders and controllers.
Adequate executive directors.
More non-executive directors.
Includes Independent Directors.
Transparent appointments.
Staggered rotation for continuity.
Independent non-executive chair.
Induction and development vital.
Appropriate Board committee appointees.
Company Secretary central role

BOARD RISK MANAGEMENT FOCUS
Company exposure areas for assessment :
Physical and operational risks (HSSE)
Human resources.
Technology (obsolescence/sabotage).
Business continuity threats.
Disaster recovery effectiveness.
Credit and market failure.
Compliance issues.
Reputational and sustainability issues.
Board Committee appointment vital.

Ethical behaviour means………
Truth and honesty
Concern with public interest
Helpful action & contribution
Lawful and correct
Improving good & positive
Observing established unwritten rules
WALK THE TALK!
ETHICAL BEHAVIOUR “THERE IS NO PLACE TO HIDE”

CORPORATE GOVERNANCE SUSTAINABILITY EMPHASIS
Board Accountability
Risk Management
Management Systems
Performance Monitoring
Reporting
Stakeholder Interaction

CHALLENGE
“ The only person who welcomes change is a
wet baby !”

RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE

by AfricanFinancials on Sep 28, 2009

Accessibility

Categories

Tags

Upload Details

Usage Rights

1 Embed 11

Statistics

RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE — Presentation Transcript