For any ‘sustainable-looking’ nation, it has now become paramount for all stakeholders; shareholders, board members, including the civil society to all take sustainability issues as a necessary urgency.
- Governance is a system by which companies are directed and controlled and its key pillars are commitment & responsibility from the board, management, transparency, accountability, and fairness. Governance is not about forceful compliance, audit, or box-ticking, it is about an individual’s quality and the drive to do only right things at all times. Governance should be about ethics and personal laws, compliance to right practices because it is morally and ethically right, as well as safe to the environment and not necessarily because it is the legal thing to do. Corporate governance cannot be imposed as values cannot be enforced.
- Governance should be about integrated thinking, not silo thinking; about the interconnectedness and interdependence of companies on societies – the environment and the econom It should be about considering the voices/input and expectations of all stakeholders – risk of stakeholder activism. Integrated thinking is considering the whole value creation process through input, output, outcomes, and impacts.
- Corporate governance has long been looked upon as more important to the private sector than to the public, however, both the public and the private sectors have the responsibilities of promoting good governance.CG seen as sustainability is important to both the public and private sectors and thus should be driven by both sectors so that a nation can attain full sustainable development. In the public, it is important that government officials realize that the role of the government is to look after the assets of citizens; be accountable in using public funds; be responsible to foreign investors; institute risk management strategies to ensure the sustainability of future generations. Governments should have political wills and plan ahead for the future, have guidelines and structures of operation, and set up tools to measure progress. Governments should also lay down ground rules for operations, as well as keep institutions, departments, and public companies accountable through annual performance evaluations. In addition, relationships, expectations, and dependencies between the public and private sectors should be defined and made clear and directors of public companies should be held liable for the performance or not of those public enterprises/institutions.
For both private and public set ups, because the board is central to the governance of any set up, criteria for selecting board members should be clear and made public knowledge; integrity should be a strong criteria for anyone to get on any board. Furthermore, independence of mind, maturity and good knowledge should not be swayed aside. Public boards as well should be evaluated regularly and results made public.
- Corporate Governance is not a one-size fits all affair and so, Africa cannot afford to pick CG models from existing ones from the west rather, the continent needs to decide its own model. With 54 individual countries, having diverse cultures and languages, it gets increasingly difficult for the continent to arrive at a unified CG model even though a model is needed for a proper functioning of governance however, each country should decide on an attainable model, which will reflect its peculiarity, culture and essence – of course very country specific. Companies should choose the governance structure most compatible with their assets, reputation and structure
- Sustainability must be Integrated into the core/heart/strategy of a company right from the start as companies that are now impacting the society and the environment positively had looked at the sustainability issues in their locality and grafted them into their business strategy and as such are attracting substantial support from stakeholders and of course, venture capitalists.
- Stakeholders are the ‘voices of reason’ for boards – they inform boards and guide management to ensure a balanced approach to sustainable profits / sustainable capitalism.
- Stakeholders are also ‘influencers of materiality’ – they confirm the relevance of material issues and future (sustainability) focus of companies – inclusivity of stakeholders confirms good CG (Professor Meryvn King). Include your stakeholders and see your company boom, disregard them and experience first-class stakeholder activism that can crack the whole system.
- Governance is not so much about comply or explain as it is about apply and expla Reporting on CG ensures transparency, accountability, comparability, inclusiveness, accuracy, sustainability context, completeness, balance, timeliness, clarity and reliability. Every organization must give an account of its governance performance using any of the several approved models- GR1; G4; Integrated Reporting.
- Citizen’s satisfaction should be the only measurement of the level and quality of governance, as the present civil activisms and violence witnessed in Africa stem from the lack of good governance. Spelling out the duties of government to be to do governance properly, be responsible, accountable, transparent, and apply healthy rules in appointing board members in both private and public companies, these are the ways to ensure that sustainable governance is achieved. Furthermore, sustainable Governance guarantees return on investment.
In building an African model for Corporate Governance, we should:
- Consider a communal approach that is in line with the African culture with stakeholders’ involvement;
- ensure divers models which ensure empowerment of all genders;
- ensure that the roots of our democracies are protected with vigilance; which we can only do through good governance.
As illustrated by Reana Rosouw, MD/CEO, Next General Consultants, there can be only two possible images of Africa- the conflicts and fragility on one end and the attractiveness; people, resources, opportunities and possible growth on the other end. One gap that stands between the continent and sustainable development is the perception gap on corruption which can only be addressed through governance.
Finally, for Africa to achieve a sustainable governance model, we should input:
- Full transparency and disclosure, integrated reporting, evaluation and measurement
- Introduction of state governance, accountability to stakeholders, driving governance through employees engagement, investments, governance for return on investment, governance for value creation;
- Integrated thinking, going beyond compliance and audit, inclusive capitalism model, governance for value chain;
- Competencies of the board, fiduciary duties, and value system.