CORPORATE GOVERNANCE IN THE AFRICAN CONTEXT

Corporate governance is not always recognized as an important development tool by people outside the private sector development field. Yet viewing democratic and economic reform from the private sector perspective can show that it is important not just that economic growth occurs, but how it occurs.

Corporate governance is what allows business to row and thrive in a way that builds strong frame work for future growth. For Africa, corporate governance is crucial to building business that uses entrusted resources efficiently, resulting in the greatest benefit for the majority of the people – maximum value with minimum waste. Corporate governance helps ensure that resources are used efficiently and effectively. Africa is a resource-rich continent. Unfortunately, these resources r often exploited for the benefit of a few individuals rather than the population as a whole. It can contribute towards a more equitable distribution of the benefits of growth, making it crucial to Africa’s development.

It is good corporate governance that will build rust between Africa’s public and private sectors, and between its leaders and the public, allowing the continent to concentrate on aggregate resources of investment and growth. Corporate governance builds responsible businesses that do not damage the environment or exploit labor. It creates a framework that allows businesses to disclose their profits and pay their taxes and create viable states and governments that use revenue to address the social needs of the population.

From this perspective, reformers in Africa are increasingly beginning to think, “How do we create businesses that are owned by our people that also utilize foreign investment efficiently and effectively? How do we create good government standards that motivate businesses to have the highest productivity?” these reformers recognize that to alleviate poverty, there must be wealth creation; to create responsible wealth in a sustainable manner, there must be good corporate governance.

THE AFRICA CONTEXT

Unfortunately, the promotion of corporate governance in Africa has not been effectively adapted to the context and needs of the continent. In general, it has been preached to Africa almost exclusively as a way to attract foreign investment, especially through privatization. This has tended to lead Africans to view corporate governance as part of the privatization process of “throwing away the ownership and control” of Africa’s rich natural heritage in exchange for foreign investment – not as something that leads to enhance productivity by more efficient enterprises for sustainable growth and development. It is for this reason that corporate governance implementation should be framed in the context of social development, economic competitiveness and viability (for states and corporation), transparent accountability, and the development of tax base. Corporate governance must be related to poverty reduction, increased standards of living, and the transformation of society. African states and citizens must see good corporate governance as well run businesses, enhanced productivity, transparent disclosure, and the responsible use of resources. The public, as consumers, needs to understand how implementation of good corporate governance results in the production of the best-quality products at the most competitive costs (and thus resulting in consumer benefits). Government need to appreciate and understand how good corporate governance enhances tax collection. Society as a whole needs to show how good corporate improves productivity and ensures the efficient allocation of resources, resulting in increased employment opportunities, a better quality of life, and poverty alleviation.