Boards & Governance in Africa - Background information

The following section provides access to a selection of free online resources related to various corporate governance aspects, covering overarching issues as well as specifically the situation in sub-Saharan Africa.

Content

1 Corporate Governance - Structures and Practices
1.1 Corporate Governance Principles
1.2 Corporate Governance in the African Context
1.3 Board Roles and Skills
1.4 Corporate Citizenship
1.5 Transparency and Accountability

2 Corporate Governance Country Reports & Case Studies
2.1 Multi-Country Comparisons
2.2 Country Case Studies

1 Corporate Governance - Structures and Practices

1.1 Corporate Governance Principles

• OECD Principles of Corporate Governance
  OECD
  
  First released in May 1999 and revised in 2004, the OECD Principles are one of the 12 key standards for international financial stability of the Financial Stability Board and form the basis for the corporate governance component of the Report on the Observance of Standards and Codes of the World Bank Group (see chapter 2.1).
  OECD, Paris | 2004 | 69pp.
  
  
• Resolving Corporate Governance Disputes
  Volume 1: Rationale
  Volume 2: Implementation
  Volume 3: Training
  Global Corporate Governance Forum
  
  The toolkit provides practical guidance on how consensus-based alternatives to adjudication can help prevent, resolve, and reduce the negative impact of corporate governance disputes and consequently contribute to improving corporate governance practices, strengthening investor confidence, and supporting business continuity. Governance disputes involve the board's powers and actions or its failure or refusal to act. The conflicts may arise between the board and its shareholders or between directors and executive management. They may also involve issues among the directors themselves and between the board and other stakeholders.
  Global Corporate Governance Forum/IFC, Washington DC | 2010
  
  
• Stakeholder Engagement and the Board: Integrating Best Governance Practices
  Global Corporate Governance Forum
  
  This publication aims to dispel negative misconceptions about the role that stakeholders can play for a business and presents a business case for systematic stakeholder engagement as a means to success and societal trust. Best practices for proactive and effective stakeholder engagement are presented which show that this can be achieved without adding extra board functions.
  Global Corporate Governance Forum/IFC, Private Sector Opinion 22, Washington DC | 2009 | 74pp.
  
  
• Corporate Governance in Emerging Markets: Why It Matters to Investors and What They Can Do About It
  Ararat, M. and Dallas, G.
  
  What should investors do when scholarly research on corporate governance in emerging markets does not provide conclusive evidence on which aspects of governance matter most across all the emerging markets and how they affect firm performance? A researcher and a practitioner team up to offer guidelines and recommendations that focus on board independence and business group affiliation.
  Global Corporate Governance Forum/IFC, Washington DC | 2011 | 24pp.
  
  
• Corporate Governance for Emerging Markets
  Krasniqi, M.
  
  This toolkit introduces key concepts in corporate governance, provides a framework for applying corporate governance principles to emerging markets situations, and outlines the four-step strategy developed by the Center for International Private Enterprise for guide the development of corporate governance reform strategies.
  Center for International Private Enterprise, Washington DC | 2008 | 16pp.
  

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1.2 Corporate Governance in the African Context

• Governance and Development
  Claessens, S.
  
  This paper investigates the relationship between corporate governance and economic development and well-being. It finds that better corporate frameworks benefit firms through greater access to financing, lower cost of capital, better firm performance, and more favorable treatment of all stakeholders. Less evidence is available on the direct links between corporate governance and poverty, and several governance issues have not been analyzed in detail yet.
  Global Corporate Governance Forum/IFC, Washington DC | 2003 | 56pp.
  
  
• Corporate Governance Practices in Developing Countries: The Case for Kenya.
  Mulili, B.M. and Wong, P.
  
  This paper examines the concept of corporate governance from a historical perspective, exploring how the agency theory and stewardship theory affect corporate governance practices. The focus of the paper is on public universities in Kenya. The authors see a need for developing countries to develop their own corporate governance models that consider the cultural, political and technological conditions found in each country and explore the challenges encountered by developing countries in the process of adopting the corporate governance ideals.
  International Journal of Business Administration 2(1) | 2011 | pp. 14-27
  
  
• Core Corporate Governance Dilemmas Facing Boards: a South African Perspective
  Seretta, H., Bendixen, M. and Sutherland, M.
  
  A key factor of success in practising good corporate governance is the board’s ability to cope with paradox. The purpose of this research has been to explore the core corporate governance dilemmas facing boards – e.g. to hold an adequate balance between social goals and economic goals, and between communal and individual goals, and to align the interests of the organization, society and all stakeholders – and aims to provide directors with an ability to identify the nature of the paradoxes to which they need to respond.
  South African Journal of Economics and Management Sciences 12(2) | 2009 | pp. 194-210

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1.3 Board Roles and Skills

• Diversity at the Head Table: Bringing Complementary Skills and Experiences to the Board
  Argüden, Y.
  
  This paper highlights different areas of diversity that should be considered in order to build a strong and well-functioning board team. The relevance of diversity of skills and experience, age distribution, tenure on the board, ethnicity and gender are discussed by using examples.
  Global Corporate Governance Forum/IFC, Private Sector Opinion 19, Washington DC | 2010 | 16pp.
  
  
• The Changing Role of the Supervisory Board Chairman: The Case of the Netherlands (1997-2007)
  Bezemer, P.-J., Peij, S.C., Maassen, G.F. and Halder, H. van
  
  Over the last ten years, the corporate governance context in most Western countries has changed as a result of irregularities, increased regulation, heightened societal expectations and shareholder activism. This paper examines the impact of the changing context on the role of chairmen of supervisory boards in the Netherlands.
  Journal of Management & Governance | 2010 | 19pp.
  
  
• Why Diversity Can Backfire on Company Boards
  Manzoni, J., Strebel, P. and Barsoux, J.
  
  The authors discuss the gap between potential and reality in the functioning of diverse boards, identifying the hurdles and suggesting solutions.
  Wall Street Journal Online | 2010 |
  
  
• Governance Since the Economic Crisis
  McKinsey&Company
  
  In this survey, directors were asked how much time their boards spend on different activities, how well they understand the issues their companies face, and what factors they think would be most effective in improving board performance. Recommendations include to spend more time overall on board work, improve the mix of skills or backgrounds on the board, and have tougher and more constructive boardroom discussions.
  McKinsey Global Survey Results | 2011 | 9pp.

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1.4 Corporate Citizenship

• Galvanising Shareholder Activism: A Prerequisite for Effective Corporate Governance and Accountability in Nigeria
  Amao, O. and Amaeshi, K.
  
  Shareholder activism has been largely neglected in the few available studies on corporate governance in sub Saharan Africa. Following the recent challenges posed by the Cadbury Nigeria Plc, this paper examines shareholder activism in an evolving corporate governance institutional context and identifies strategic opportunities associated with shareholders’ empowerment through changes in code of corporate governance and recent developments in information and communications technologies in Nigeria.
  Journal of Business Ethics, 82(1) | 2008 | pp. 119-130
  
  
• Corporate Social Responsibility in Sub-Saharan Africa: A Survey on Promoting and Hindering Factors
  GTZ South Africa
  
  The objective of a survey among 85 diverse companies from South Africa, Ghana, Kenya, Malawi, Mozambique and Namibia was to identify and gain deeper insight into factors that promote or hinder success in CSR project management and delivery, and on the basis thereof to arrive at conclusions and recommendations about enabling instruments that will benefit, strengthen and expand CSR impact in the region.
  GTZ, German Federal Ministry for Economic Corporation and Development, British High Commission South Africa | 2009 | 123pp.
  
  
• Ethics and Sustainability Within SMEs in Sub-saharan Africa: Enabling, Constraining and Contaminating Relationships
  Painter-Morland M. and Dobie, K.
  
  The authors explore the role ethics play in African SMEs, especially looking at the role that relationships between SMEs and their stakeholders play in enabling or foreclosing the possibility of ethical business practices.
  African Journal of Business Ethics, 4(2) | 2009 | pp.7-19
  
  
• Corporate Social Responsibility, Partnerships, and Institutional Change: The Case of Mining Companies in South Africa
  Hamann, R.
  
  Internationally and in South Africa, mining companies traditionally saw CSR as a means to improve image and reputation. This approach, however, did not contribute to alleviating social problems around the mines as they did not impact on core business practices and did not contribute to necessary cross-sectoral collaboration. The authors describe gradual changes in the CSR approach brought about by market-based incentives and especially the introduction of a guiding institutional framework by the State.
  Natural Resources Forum, 28(4) | 2004 | pp. 278-290
  
  
• How can Corporate Social Responsibility Deliver in Africa? Insights from Kenya and Zambia
  Kivuitu, M., Yambayamba, K. and Fox, T.
  
  It is now recognized that poverty reduction and sustainable development will not be achieved through government action alone. Policy makers are paying increasing attention to the potential contribution of the private sector to achieve objectives around labour standards, human rights, education, health, child labour, poverty reduction, conflict and environmental impacts. This paper describes key aspects of the emerging CSR agenda in two countries in sub-Saharan Africa – Kenya and Zambia.
  International Institute for Environment and Development (iied), Perspectives on Corporate Responsibility for Environment and Development No. 3 | 2005 | 5pp.
  
  
• Corporate Citizenship Education for Responsible Business Leaders
  Prinsloo, P., Beukes, C. and Jongh, D.D.
  
  Corporate scandals, concerns about global warming and the continued abuse of natural and human resources by business demand a critical reflection and redefinition of global leadership. Besides legislation and enforcement, education and training can play an important role in shaping responsible business and citizen behaviour. Corporate citizenship education should include not only acquiring a working knowledge of applicable legislation but also interrogating the complex challenges and paradoxes business leaders face.
  Development Southern Africa, 23(2) | 2006 | pp. 197-211
  
  
• Rebuilding Corporate Leadership: How Directors Can Link Long-Term Performance with Public Goals
  Research and Policy Committee
  
  This report examines how efforts to build public trust and long-term value have coalesced to encourage many large, global corporations and their boards to pay greater attention to their longer-term interests by striking a balance between short-term commercial pursuits and such societal concerns as the environment, labor standards, and human rights, or even turn them into commercial opportunities.[requires log-in/registration is free]
  Committee for Economic Development ,Washington DC | 2009 | 93pp.

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1.5 Transparency and Accountability

• Corruption from a Cross-Cultural Perspective
  Hooker, J.
  
  This paper views corruption as an activity that tends to undermine a cultural system. Because cultures operate in very different ways, different activities are corrupting in different parts of the world. The paper analyzes real-life situations in Japan, Taiwan, India, China, North America, sub-Saharan Africa, the Middle East, and Korea to distinguish actions that structurally undermine a cultural system from those that are merely inefficient or are actually supportive. This perspective provides culturally-sensitive guidelines not only for avoiding corruption but for understanding the mechanisms that make a culture work.
  Carnegie Mellon University, Pittsburg | 2008 | 19pp.
  
  
• Corporate Governance and Incidences of Listing Suspension by the JSE Securities Exchange of South Africa: An Empirical Analysis
  Mangena, M. and Chamisa, E.
  
  The authors examine the association between corporate governance structures and incidences of listing suspension from the JSE Securities Exchange of South Africa, comparing 81 firms suspended between 1999 and 2005 to an equal number of control firms matched in terms of time, size and industry.
  The International Journal of Accounting, 43(1) | 2008 | pp. 28-44
  
  
• Governance and Corruption in Ghana - Empircal Findings and Policy Implications
  Mensah, S., Aboagye, K., Addo, E. and Buatsi, S.
  
  Using an empirical survey among a sample of publicly listed, private and state companies, this research aimed to explore empirical evidence of the linkage between corporate governance practices and corruption in Ghana. The research provides a basis for generating recommendations for (1) strengthening corporate governance in Ghana for the private, public, and government sectors and (2) combating private sector driven or “supply-side” corruption.
  IDRC, ACMF, CIPE, Accra | 2003 | 106pp.
  
  
• Perspectives on Corporate Governance Challenges in a Sub-Saharan African Economy
  Opkara, J.O.
  
  The purpose of this research is to investigate the barriers and issues hindering effective corporate governance development in Nigeria. A survey method was used to collect data from 198 respondents from 100 firms listed in Nigerian Stock Market and Equity Security. The findings reveal that barriers hindering the implementation and promotion of effective corporate governance in Nigeria include abuse of minority shareholders’ rights, lack of commitment on the part of boards, lack of adherence to the regulatory framework, weak enforcement and monitoring systems, and lack of transparency and disclosure.
  Journal of Business & Policy Research, 5(1) | 2010| pp. 110-122
  
  
• Global Corruption Report 2009.
  Transparency International (eds)
  
  The private sector plays a pivotal role in fighting corruption worldwide. This report documents the many corruption risks for businesses, ranging from small entrepreneurs in Sub-Saharan Africa to multinationals from Europe and North America. It also discusses the most promising tools to tackle corruption in business, identifi es pressing areas for reform and outlines how companies, governments, investors, consumers and other stakeholders can contribute to raising corporate integrity and meeting the challenges that corruption poses to sustainable economic growth and development.
  Transparency International, Cambridge University Press, Ernst&Young, Berlin | 2009 | 492pp.
  

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2 Corporate Governance Country Reports and Case Studies

2.1 Multi-Country Comparisons

• Multiple Influences on Corporate Governance in sub-Saharan Africa: Actors, Strategies and Implications
  Adegbite, E. and Amaeshi, K.
  
  This paper examines the influences of three major actors – the international organisations, rating agencies, and indigenous African institutions - on the fledging corporate governance and accountability practice in Nigeria. Findings from this study suggest that corporate governance in Nigeria seems to be in a flux resulting from a degree of ‘confusion’ in the country’s corporate governance system with regards to ‘which corporate governance model’ to follow, due to the influential powers of these three actors.
  CSGR Working Paper 267/10, University of Warwick | 2010 | 40pp.
  
  
• An Overview of Corporate Governance and Accountability in Southern Africa
  Economic Commission for Africa - Southern Africa Office
  
  This paper reviews the concepts of political, economic and corporate governance, based on the assumption that corporate governance derives from economic and political governance. It discusses the corporate governance standards that have been developed in line with the changed economic systems from State ownership to private ownership and provides an overview of the applications of these standards in the financial sector, the extractive industries and the State-owned enterprises sector. Finally issues and challenges that need to be addressed in the corporate governance debate are identified.
  United Nations Economic Commission for Africa, Addis Ababa | 2007 | 45pp.
  
  
• Corporate Governance Country Profiles
  Homepage of eStandards Forum
  
  This website allows to create overview reports on a country's performance in terms of implementation of the OECD Principles of Corporate Governance and key standards for Sound Financial Systems. Data and supplementary sources for the following African countries are available: Algeria, Cameroon, Ghana, Kenya, Morocco, Nigeria, South Africa, Tanzania, Tunisia.
  Financial Standards Foundation | 2010 | Webpage
  
  
• Corporate Governance Success Stories
  IFC Advisory Services in the Middle East and North Africa
  
  The purpose of this report is to help demonstrate the business case for good corporate governance in MENA. It shares the experiences of 11 companies that have made governance improvements over the past few years, summarizing the changes they made and the impacts they reported. Overall, companies reported highly positive impacts as a result of their corporate governance changes. Companies made improvements at all levels of the organization from the board level to the management level.
  The International Finance Corporation, Cairo | 2010 | 64pp.
  
  
• Corporate Governance and Shareholder Value Maximization: An African Perspective
  Kyereboah-Coleman, A.
  
  This study looks at corporate governance and its impact on shareholder value maximization using data from South Africa, Ghana, Kenya and Nigeria from the period 1997–2001. Results show that corporate boards are relatively not independent, that large board sizes enhance corporate performance and shareholder value maximization, and that both sector and country-specific effects have an impact on shareholder value maximization.
  African Development Review 19(2) | 2007 | pp. 350-367
  
  
• Doing Business in the East African Community 2010 - Comparing Regulation in 5 Economies
  The World Bank and International Finance Corporation
  
  Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies—from Afghanistan to Zimbabwe—over time. This report presents a summary of indicators for the East African Community, focusing on 5 economies: Burundi, Kenya, Rwanda, Tanzania and Uganda.
  The World Bank, Washington DC | 2010 | 73pp.
  
  
• ROSC - Reports on the Observance of Standards and Codes
  The World Bank
  
  As part of the Reports on the Observance of Standards and Codes (ROSC) initiative, the World Bank has established a program to assist its member countries in strengthening their corporate governance frameworks. The objectives of this program are to benchmark existing frameworks and company practices against the OECD Principles for Corporate Governance, to assist in developing and implementing a country action plan, and to raise awareness of good corporate governance practices among the country’s public and private sector stakeholders.
  [Note: reports from several African countries available on the site, however, often 5+ years old].
  The World Bank, Washington DC. | 2010 | Webpage
  
  
• Doing Business 2011 - Making a Difference for Entrepreneurs: Comparing Business Regulation in 183 Economies
  The World Bank and The International Finance Corporation
  
  The report presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies—from Afghanistan to Zimbabwe— and over time.
  The World Bank, Washington DC | 2011 | 267pp.
  
  

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2.2 Country Case Studies

• Corporate Governance in South Africa - An Investor Perspective
  Institute of International Finance (IIF) Equity Advisory Group
  
  The aim of this report is to offer an assessment as to where South Africa stands relative to the investment environment that members of the IIF Equity Advisory Group would like to see develop in key emerging market countries. While it is not meant to provide an exhaustive due diligence of corporate governance in South Africa, it identifies key corporate governance issues and provides recommendations for improvements.
  IIF Task Force Report, Washington DC | 2007 | 39pp.
  
  
• Board Governance in South Africa
  SpencerStuart
  
  Corporate governance in South Africa has come a long way in the 15 years since publication of the King I Report. Faced with increasing levels of complexity, South African boards today take an increasingly professional and often highly progressive approach to governance that reflects the high expectations on businesses to play their part in the social transformation agenda. The study examines the role of the board, the chairmen and the value of independent non-executive directors. It explores the challenges boards face in overcoming talent shortages while achieving balance and diversity of composition.
  SpencerStuart, Johannesburg | 2007 | 39pp.
  
  
• King Report on Governance for South Africa - King III
  The Institute of Directors in Southern Africa and The King Committee
  
  The third report on corporate governance in South Africa became necessary because of the new Companies Act no. 71 of 2008 (=the Act‘) and changes in international governance trends. This Report, referred to as King III, was compiled by the King Committee with the help of the King subcommittees.
  The Institute of Directors in Southern Africa, Johannesburg, 3rd edn | 2009 | 118pp.
  
  
• Corporate Governance and Firm Performance: The Case of Nigerian Listed Firms
  Kajola, S.O.
  
  This paper seeks to examine the relationship between four corporate governance mechanisms (board size, board composition, chief executive status and audit committee) and two firm performance measures (return on equity (ROE), and profit margin (PM)), of a sample of twenty Nigerian listed firms between 2000 and 2006. The article concludes that the board size should be limited to a sizeable limit and that the posts of the chief executive and the board chair should be occupied by different persons, as well as a positive significant relationship between PM and chief executive status.
  European Journal of Economics, Finance and Administrative Sciences, (14) | 2008 | pp. 16-28
  
  
• Conceptual Framework for Corporate Governance in Nigeria – Challenges and Panaceas
  Quadri, H.A.
  
  This research paper reviews the conceptual framework of corporate governance in Nigeria and seeks to understand current best practice, the challenges, the failure and offered policy recommendations as panaceas for efficient implementation of empirically validated international corporate governance best practice in Nigeria.
  PM World Today, XII(IX) | 2010 | 8pp