African Corporate Growth Depends on Corporate Governance

African economic growth will not be sustainable if the continent does not improve its reputation for corporate governance, says Ansie Ramalho, CEO of the Institute of Directors in Southern Africa (IoDSA). Ramalho was speaking ahead of the second meeting of the African Governance Network, to be held in Harare on 10 and 11 June 2013.

"Africa’s growth will be real only if it develops strong companies able to compete successfully in their home and overseas markets,” Ramalho says. "We know from the experience of the developed world that governance is essential to sustained corporate success.”

Renewed global hunger for its resources and, increasingly, its increasingly vibrant home markets are revitalising African growth. African companies have grown substantially and many are now regional. Their success will initiate a virtuous cycle of improved infrastructure, growing intra-African trade and improved opportunities for millions.

However, as the Organisation for Economic Co-operation and Development (OECD) puts it, "markets need to have a robust framework of corporate governance rules and regulations that provides investors with confidence in the system and entrepreneurs with the incentives to develop their businesses”. The OECD report also emphasizes that developing and emerging markets, in particular, must have strong corporate governance in order to access to external capital they need to realise their full potential for economic growth.^[1]

Mauritius and South Africa both offer excellent examples of how strong corporate governance can play a role in building strong economies. "Mauritius’ development as a financial services and outsourcing hub would not have been possible without a strong foundation in corporate governance,” says Jane Valls, Chief Executive Officer of Mauritius Institute of Directors. "There is much we can learn from each other as we develop frameworks appropriate to the conditions within each of our countries.”

Institutions from South Africa, Mauritius, Nigeria, Zimbabwe, Kenya, Tanzania, Malawi, Mozambique and Zambia are all members of the new governance network. The NEPAD Business Foundation and ACCA are 2 of the partners who are collaborating on this initiative. Jamil Ampomah, Director - Sub Saharan Africa for ACCA, who is sponsoring the meeting of delegates, says that ACCA is an active participant in global developments in corporate governance and risk management. Good corporate governance is one of the key elements that will support the growth, and shape the future, of Africa. We believe that our presence in 11 countries in Sub Saharan Africa, positive relationships with IODs in the region, and our 11 000 members in Africa will contribute to the success of the relationship with ACGN.”

"In this context, the successful formation of the African Governance Network is highly significant,” says Derek Browne from the NEPAD Business Foundation. "The initial meeting in January confirmed that a large number of credible governance organisations across the continent are on board. By building an Africa-wide governance framework, we are helping to lay the foundations for solid corporate growth and increased foreign investment.”