When the ripples of the global financial meltdown touched the shores of the emerging markets in sub-Saharan Africa, deeply rooted administrative inefficiencies were laid bare.
Major conglomerates thought to have viable asset bases and healthy internal structures went liquid in less time than it took to build them revealing severe shortcomings in the business sector.
One of the prime reasons cited for the collapse was the fallible practices in indigenous corporate governance among purportedly stable blue-chip institutions. When most needed, existing standards failed to provide the checks and balances that companies require to cultivate sound business processes.
With more home-grown companies expanding faster than they can manage, it has become plausible for systemic flaws in the management and regulation of intricate company policies to create friction in the effective maximisation of resources for optimal productivity.
According to reports by the Organisation for Economic Co-operation and Development (OECD), “It is important for jurisdictions to regularly review whether their supervisory, regulatory and enforcement authorities are sufficiently resourced, independent and empowered to deal with corporate governance weaknesses that have become apparent.”
This, they state, should include an assessment of inter-agency as well as communication decision making systems.
While organisational development experts bemoan issues like the ambiguous expenses carried out particularly by top management personnel and uneven distribution of information across and along the cadre, others advocate for the firmer adherence to standards ratified by the Securities and Exchange Commission, SEC, to ensure accountability without unduly inhibiting enterprise.
To develop the culture of values for professionals and ethical behaviour on which well-functioning markets depend, the Acting Director, Financial Standard and Corporate Governance at the Securities and Exchange Commission, Edward Okolo, posited, “Corporate governance is a new way of doing business that people need to engage in voluntarily but as we have witnessed, people are averse to change. We think that if companies comply strictly with the requirements of the code of conduct and Companies and Allied Matters Act on the processes ensuring that the audit committee carries out its functions as well as making sure that the [auditors] are actually skilled enough and understand the industry, a lot of these problems will significantly reduce.”
As professionals campaign for a change in the pattern in which directors manage their corporate affairs, they also insist on the need to set up long-term autonomous teams to monitor company activities.
Addressing the necessity of encouraging independence in the administrative board, Bisi Adewunmi, the Managing Director of DCSL Consulting Services Limited (formerly Delloitte Consulting) stated, “We need to get to a stage where people on the board are not stakeholders because their focus for the company will not be on things like staff welfare rather it will be focused on the bottom-line. This is why there is an advocacy all over the world for more independent directors on the board.
“There is also the importance of making sure the board works with proper oversight by setting up the appropriate risk management committees to check the activities of the organisation so that a recurrence of what happened in the banking sector does not repeat itself where there wasn’t a proper assessment of the kind of risks they were taking thereby exposing shareholders funds,” she concluded
Okolo who spoke at the DCSL Consulting Services Limited training held at the Intercontinental Hotel last week also lays emphasis on the requirements for proper education of personnel on integrity based practises; “When more training programmes are organised and these contentious issues are analysed from different perspectives they will go and reflect on the things they have learnt as well as do their best to effect change. Things are already evolving as the concept of whistle-blowing is becoming common knowledge and people are adhering more to the provisions the code of conduct.
Other ways to ensure an organisation functions sustainably with international modus operandi as its foundation includes putting early warning systems in place as well as taking steps to downplay the roles of external financial institutions like banks.
Also clearly defining the roles of institutional investors and private equity fund providers by limiting their supervisory administrative functions within the organisations and inhibiting counter monopolistic decision making processes as witnessed in some telecoms establishments is vital.
Rita Ohai
