By Obinna Chima
A new joint study by the Association of Chartered Certified Accountants(ACCA) and KPMG has found that the standards of corporate governance code across several African countries are well aligned with the Organisation for Economic Co-operation and Development (OECD) Principles of Corporate Governance released in 2015.
The study titled: ‘Balancing Rules and Flexibility for Growth,’ focussed on 15 countries across Africa, and examined the corporate governance requirements for listed companies against the benchmark across four tenets of corporate governance.
These were derived from the OECD principles and included: leadership and culture, strategy and performance, compliance and oversight, and stakeholder engagement. Governance requirements were assessed based on their clarity and completeness of content, degree of enforceability and availability of relevant requirements.
While one-third of the countries studied by KPMG and ACCA have 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 report was launched in Lagos yesterday, at a joint press briefing held by both organisation.
The study found that all 15 African markets respectively have a corporate governance code or equivalent in place, with most countries adopting their first codes from 2000 onwards.
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 percent of the OECD Principles.
Commenting on the study, the Partner and Head of Board Advisory Services, KPMG in Nigeria, Tomi Adepoju said: â€œA number of countries have had corporate governance codes for some time and the experience of implementing them has created practical learning points. African markets will be able to leverage the lessons learned in the evolution of similar codes in other markets.â€
â€œWe 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.â€
Looking at the comparison within this study, and from phase one of the same report which looked at 25 markets globally, Tomi added: â€œImplementing corporate governance well will prepare companies for the opportunities that come with the anticipated high growth rates of the African markets.â€
Speaking about the findings in relation to Africaâ€™s development,Â the Head of Policy, Sub Saharan Africa, ACCA, Jane Ohadike said: â€œAs 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.â€
Most markets mandate the basic corporate governance requirements such as financial disclosure, shareholdersâ€™ rights and the role of the board, supplementing these with non-mandatory guidelines for good practice.
â€œAchieving 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,â€ Jane added, saying: â€œAlthough 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 â€˜one-size-fits-allâ€™, there is value in continuing to compare and incorporate internationally accepted standards of corporate governance.â€
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.