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‘Corporate governance sustains Nigeria, 14 other economies’

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Director, Sub-Saharan Africa, ACCA, Jamil Ampomah


Amid global economic downturn, majority of African countries are currently recording economic prosperity due to robust corporate governance codes of practice, a study has said.

The latest joint study by the Association of Chartered Certified Accountants (ACCA), and KPMG, found that standards of corporate governance code now practiced by these countries are well aligned with the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance released in 2015.

The report titled: “Balancing Rules and Flexibility for Growth,” focused on 15 countries across the continent and examined the corporate governance requirements for listed companies against the benchmark across four tenets of corporate governance.

The rules derived from OECD principles include leadership and culture; strategy and performance; compliance and oversight; and stakeholder engagement.The report ranked South Africa number one, having adopted the largest number of OECD Principles, with Kenya, Mauritius, Nigeria, and Uganda completing the top five.

Overall, a majority of markets (10 out of 15) have aligned their corporate governance requirements with more than 80 per cent of OECD Principles. While one-third of the countries studied by KPMG and ACCA had recently reviewed their corporate governance codes, now could be the right time for others to take stock and make improvements, given the impetus of the new OECD Principles and the need to encourage more foreign direct investment.

The study found all 15 African markets have a corporate governance code or equivalent in place, with most countries adopting their first codes from 2000 onwards. The Partner and Head of Risk Consulting, KPMG in Singapore, Irving Low, said: “A number of countries have had corporate governance codes for some time and the experience of implementing them has created practical learning points. The African markets will be able to leverage the lessons learned in the evolution of similar codes in other markets.

“We hope this study can contribute to raising the standard of corporate governance requirements across Africa. Each market needs to consider their specific political, legal, economic, social and cultural environment when making decisions about developing, defining and enforcing corporate governance requirements.”

But looking at the comparison within this study, and from phase one of the same report that comprised 25 markets globally, Irving added: “Implementing corporate governance well will prepare companies for the opportunities that come with the anticipated high growth rates of the African markets.”

The Director, Sub-Saharan Africa, ACCA, Jamil Ampomah, said: “As these markets grow and evolve, more awareness and effort will be needed to strengthen remaining critical areas of corporate governance, particularly for remuneration structures, performance evaluation, risk governance, and board composition and diversity.

He said that most markets mandate the basic corporate governance requirements such as financial disclosure, shareholders’ rights and the role of the board, supplementing these with non-mandatory guidelines for good practice.

“Achieving the right balance between rules and flexibility is a tricky task for any country, but of fundamental importance for those where corporate governance is critical to support robust economic growth.

“Although decisions about how to shape a corporate governance framework and how fast to do so may be unique to each market, and there is no ‘one-size-fits-all’, there is value in continuing to compare and incorporate internationally accepted standards of corporate governance,” Jamil said.

The 15 countries examined in this study were Egypt, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, Tunisia, Uganda and Zambia.



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