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RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE
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RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE

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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

Corporate Governance Summit – ZIMLEF Harare 28/09/2009

Published in: Business, News & Politics
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  • 1. RE-BUILDING CORPORATE GOVERNANCE STRUCTURES AND SYSTEMS IN ZIMBABWE 28 SEPTEMBER 2009 HARARE, ZIMBABWE By : Shepherd Shonhiwa Chief Executive, Gateways Business Consultants
  • 2. CHANGE PRE-REQUISITE <ul><li>“ You have to be prepared to leave sight of land and sail afar to discover new shores” </li></ul>
  • 3. OVERVIEW <ul><li>Time for change = NOW! </li></ul><ul><li>Why Corporate governance? </li></ul><ul><li>Zimbabwe business environ profile </li></ul><ul><li>Corporate governance pillars </li></ul><ul><li>Corporate governance systems </li></ul><ul><li>CG code implementation process </li></ul><ul><li>Adopt a “wet baby” attitude! </li></ul>
  • 4. CORPORATE EVOLUTION <ul><li>19 th Century = </li></ul><ul><li>20 th Century = </li></ul><ul><li>21 st Century = </li></ul><ul><li>Century of the Entrepreneur. Establishment of Corporation Concept. </li></ul><ul><li>Century of Management. </li></ul><ul><li>Management theories/gurus. </li></ul><ul><li>Century of corporate governance. </li></ul><ul><li>Focus on legitimacy & effectiveness. </li></ul><ul><li>Checks and balances on Management Power. </li></ul>
  • 5. CORPORATE EVOLUTION (continue) <ul><li>To Prevent: </li></ul><ul><li>WORLD FINANCIAL CRISIS - 2008/9 </li></ul><ul><li>LERMAHN BROTHERS Inc - 2008 USA </li></ul><ul><li>USA AUTO INDUSTRY - 2008 </li></ul><ul><li>ENRON ) - </li></ul><ul><li>WORLDCOM ) - </li></ul><ul><li>REGAL BANK - SOUTH AFRICA - 2001 </li></ul><ul><li>LEISURENET - SOUTH AFRICA - 2002 </li></ul><ul><li>A.N.G. BARING BANK - MALAYSIA - 1998 </li></ul><ul><li>BANK OF COMMERCE & CREDIT - 1990s </li></ul>2002 USA
  • 6. 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
  • 7. VALUE OF GOOD CORPORATE GOVERNANCE <ul><li>Prevent management sins of greed/sloth and fear - McKinsey Survey 2000. </li></ul><ul><ul><li>Good governance = good business management. </li></ul></ul><ul><ul><li>Investors pay premium for well governed company. </li></ul></ul><ul><ul><li>Board practices = financial performance. </li></ul></ul><ul><ul><li>Management enhances Shareholder value. </li></ul></ul><ul><ul><li>Preempts shareowner activism. </li></ul></ul>Jim Wolfensohn, World Bank President “ The proper governance of companies will become as crucial to the world economy as the proper governing of countries”
  • 8. <ul><li>“ 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” </li></ul>Arthur Levitt, former chairman, US Securities & Exchange Commission.
  • 9. EXTERNAL BOARDROOM VIEW OF ZIMBABWE <ul><li>Inherent long term economic potential </li></ul><ul><li>Undervalued assets </li></ul><ul><li>Innate skilled labour </li></ul><ul><li>Low entry barriers </li></ul><ul><li>High country risk for investment </li></ul><ul><li>No rule of law </li></ul><ul><li>No property rights </li></ul><ul><li>Excessive government controls </li></ul><ul><li>Patronage system prevalent </li></ul><ul><li>Unstable economy </li></ul><ul><li>Poor corporate governance </li></ul><ul><li>Unclear investment policies </li></ul><ul><li>Excessive brain drain </li></ul><ul><li>Political instability </li></ul>
  • 10. Why Corporate Governance System in Zimbabwe? <ul><li>Avoid “Big Brother” global spotlight </li></ul><ul><li>Improves unsolicited governance rating </li></ul><ul><li>Re-kindles FDI interest </li></ul><ul><li>Impacts on cost of capital </li></ul><ul><li>Reduces cost of doing business </li></ul><ul><li>Facilitates economic recovery </li></ul><ul><li>Enhances brand name Zimbabwe </li></ul><ul><li>Defines Government-Business relations </li></ul>
  • 11. ZIMBABWE CORPORATE GOVERNANCE REVIVAL TEMPLATE <ul><li>Build the ship while sailing – URGENT </li></ul><ul><li>Boards & Directors to change first </li></ul><ul><li>Marshal all stakeholders support </li></ul><ul><li>Agree common approach and interests </li></ul><ul><li>Don’t re-invent the wheel </li></ul><ul><li>Define project critical path upfront </li></ul><ul><li>Conform to timeline and procedure </li></ul><ul><li>Business sector drives/owns the process </li></ul><ul><li>Do not politicize Corporate Governance </li></ul>
  • 12. CORPORATE GOVERNANCE REVIVAL IN ZIMBABWE “THE PLAYERS” <ul><li>Private sector committee at helm </li></ul><ul><li>Neutral professional secretariat </li></ul><ul><li>Moral and philosophical political support </li></ul><ul><li>Forums for critical corporate governance areas </li></ul><ul><li>External advisory reference point </li></ul><ul><li>Keep end goal in mind </li></ul><ul><li>Hype up continual by-stander interest= communication </li></ul><ul><li>Produce fit-for-purpose code initially. </li></ul>
  • 13. CODE OF GOOD CORPORATE PRACTICES & CONDUCT <ul><li>Must apply to: </li></ul><ul><li>ZSE listed companies </li></ul><ul><li>All financial institutions </li></ul><ul><li>State owned commercial enterprises </li></ul><ul><li>All formal organizations encouraged to conform </li></ul><ul><li>Guiding principle = “COMPLY OR EXPLAIN” </li></ul>
  • 14. SEVEN CHARACTERISTICS OF GOOD CORPORATE GOVERNANCE <ul><li>Corporate Discipline : Senior management commitment to universally accepted behaviour. </li></ul><ul><li>Transparency : Candid, accurate and timely information. </li></ul><ul><li>Independence : Minimising potential conflicts and dominance. </li></ul><ul><li>Accountability for Board and management decisions. </li></ul><ul><li>Responsibility : Board responsiveness to all stakeholders. </li></ul><ul><li>Fairness : Balanced systems for all stakeholders. </li></ul><ul><li>Social Responsibility : Responsiveness to social issues. </li></ul>
  • 15. PARAMETERS OF CORPORATE GOVERNANCE <ul><li>Board and Directors responsibilities. </li></ul><ul><li>Accounting and Auditing practices. </li></ul><ul><li>Internal Audit, Control, Risk management Functions. </li></ul><ul><li>Integrated Sustainability Reporting. </li></ul><ul><li>Compliance and Enforcement guidelines. </li></ul>
  • 16. BOARD COMPOSITION <ul><li>Effective leaders and controllers. </li></ul><ul><li>Adequate executive directors. </li></ul><ul><li>More non-executive directors. </li></ul><ul><li>Includes Independent Directors. </li></ul><ul><li>Transparent appointments. </li></ul><ul><li>Staggered rotation for continuity. </li></ul><ul><li>Independent non-executive chair. </li></ul><ul><li>Induction and development vital. </li></ul><ul><li>Appropriate Board committee appointees. </li></ul><ul><li>Company Secretary central role </li></ul>
  • 17. BOARD RISK MANAGEMENT FOCUS <ul><li>Company exposure areas for assessment : </li></ul><ul><li>Physical and operational risks (HSSE) </li></ul><ul><li>Human resources. </li></ul><ul><li>Technology (obsolescence/sabotage). </li></ul><ul><li>Business continuity threats. </li></ul><ul><li>Disaster recovery effectiveness. </li></ul><ul><li>Credit and market failure. </li></ul><ul><li>Compliance issues. </li></ul><ul><li>Reputational and sustainability issues. </li></ul><ul><li>Board Committee appointment vital. </li></ul>
  • 18. <ul><li>Ethical behaviour means……… </li></ul><ul><li>Truth and honesty </li></ul><ul><li>Concern with public interest </li></ul><ul><li>Helpful action & contribution </li></ul><ul><li>Lawful and correct </li></ul><ul><li>Improving good & positive </li></ul><ul><li>Observing established unwritten rules </li></ul><ul><li>WALK THE TALK! </li></ul>ETHICAL BEHAVIOUR “THERE IS NO PLACE TO HIDE”
  • 19. CORPORATE GOVERNANCE SUSTAINABILITY EMPHASIS <ul><li>Board Accountability </li></ul><ul><li>Risk Management </li></ul><ul><li>Management Systems </li></ul><ul><li>Performance Monitoring </li></ul><ul><li>Reporting </li></ul><ul><li>Stakeholder Interaction </li></ul>
  • 20. CHALLENGE <ul><li>“ The only person who welcomes change is a </li></ul><ul><li>wet baby !” </li></ul>

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