World Bank in drive to improve corporate governance in the region

Politics and policy

The IFC and Switzerland have launched an initiative to improve corporate governance in the region. FILE 

By NEVILLE OTUKI

In Summary

• The Central Bank of Kenya chairman Mohammed Nyaoga said adoption of clear roles and performance targets for company board member members would help improve the fortunes of struggling firms.
• The chairman urged companies to keep a risk register to identify, assess and manage risk in finance, operations, investment and corporate reputation.
• The chairman urged companies to keep a risk register to identify, assess and manage risk in finance, operations, investment and corporate reputation.

The International Finance Corporation and Switzerland’s State Secretariat for Economic Affairs (Seco) have launched a corporate governance initiative that targets to transform the management of business in the region.

As part of the initiative, officials of the World Bank’s private sector lending arm will offer advisory services to corporates in Kenya, Uganda, Tanzania and Rwanda in financial transparency, operations and decision making. IFC will also co-fund the programme alongside Seco.

“This programme will equip businesses with the tools they need to attract and retain investment and operate efficiently to boost economic growth in the region,” IFC director for Eastern and Southern Africa Cheikh Seydi said in Nairobi on Tuesday during the launch of the programme, adding that it will help root out corruption and tackle tax evasion.

He said that firms with good governance practices enjoy lower financial risks that grants them improved access to capital markets alongside higher visibility of their products and accountability to shareholders.

Good corporate governance is deemed critical for businesses because it helps cut regulatory costs.

STRONG ECONOMY

“We believe that a steady partnership between public and private sectors is key in building a strong economy,” said Switzerland ambassador to Kenya Ralf Heckner.

The Central Bank of Kenya chairman Mohammed Nyaoga said adoption of clear roles and performance targets for company board member members would help improve the fortunes of struggling firms.

“When a board struggles, management struggles, resulting in weak overall operations,” Mr Nyaoga said.

“Boards struggle because directors don’t know their roles; when there is no clarity in the growth direction of the business.”

The chairman urged companies to keep a risk register to identify, assess and manage risk in finance, operations, investment and corporate reputation.

IFC has a keen interest on corporate governance in east Africa due to its growing portfolio of investment in the region. The IFC has for example pumped Sh210.7 billion ($2 billion) into Kenya’s economy for different projects in the last 10 years.

In the year to June 30, 2015, IFC committed a portfolio of Sh87 billion for projects in Kenya, the second highest for sub-Saharan Africa after Nigeria.

The allocation marks an increase from 2014 when IFC committed Sh84.8 billion, the agency said in its newly published annual report for 2015.