AFRICAN STATE-OWNED ENTERPRISES

Only 17 countries in Africa have stock exchanges. So, when corporate governance is framed in the context of a capital market, most of the 53 African countries are alienated. This is why, although it is important to ensure that good corporate governance is implemented in all of Africa’s larger companies (whether they are state-, foreign-, or locally owned), it is particularly important to talk about corporate governance as it relates to state-owned enterprises.

In Africa, as elsewhere in the world, it is primarily state-owned enterprises that work in the natural resource sector. These companies exert huge influence over their national economies, and therefore, it is essential that they adopt good corporate governance. However, because state-owned enterprises have been put in the command position in the economy, good corporate governance and growth in this sector would lead to development in other sector would lead to development in other sectors. For example, seeing the positive applications for state-owned companies, in April 2003, Kenya launched its guidelines on corporate governance and state-owned enterprises. Shortly thereafter, the government introduced performance contracting in state owned enterprises. Today, performance contracting has been introduced into the ministries, and into local administrations. It is mandatory for directors who sit on the boards of state-owned companies to be trained in corporate governance as part of their performance contracts. Furthermore, in public procurement, the government requires transparent disclosure by all involved parties.