Business Ethics and Corporate Governance in Africa

Business Ethics and Corporate Governance in Africa

Business Ethics and Corporate Governance in Africa

The 53 countries on the African continent can be divided roughly into three main zones based on their official languages. These three groups are the Arab-speaking countries in North Africa (the Maghreb zone), the French-speaking countries of central and western Africa (the Franc or Francophone zone), and the English-speaking countries of southern, eastern, and western Africa (the commonwealth states or Anglophone zone). Economic activity on the continent is dominated by three countries with Algeria, Egypt, and South Africa contributing 60% of Africa’s GDP, and the other 50 countries sharing the remaining 40% (Armstrong, 2003, p. 6). Most private sector companies in Africa are nonlisted small-to-medium enterprises (SMEs). State-owned enterprises (SOEs) still dominate African markets, with the exception of South Africa. Stock exchanges are relatively small, once more with the exception of South Africa.
The need for corporate governance among listed and nonlisted companies and state-run enterprises are great. Among the most promising developments in corporate governance reform in Africa count the various initiatives around the continent to develop national codes of corporate governance. These initiatives are often driven by the private sector and professional bodies. Organizations such as institutes of directors or professional bodies such as associations of accountants often take the lead along with other stakeholder groups to produce standards of good governance that are recommended to the local business community. In developing such codes, recognition is taken of corporate governance developments elsewhere on the continent and in the world. Especially three codes of corporate governance are often cited and explicitly referred to as major influences on the development of such national codes of corporate governance. They are the OECD Principles of Corporate Governance (1999), the Commonwealth Association for Corporate Governance (CACG) Principles for Corporate
Governance (1999), and either the first or second King Report on Corporate Governance for South Africa (Institute of Directors of South Africa [IoD], 1994, 2002). These national codes of corporate governance over time tend to find their way in an evolutionary manner into listing requirements of stock exchanges, rules of professional bodies, and also into legislation—thus effecting corporate governance reform from the bottom up. A substantial number of such national codes of corporate governance have already been produced, mostly in the Anglophone countries in Africa. It is in these codes that business ethics is explicitly addressed. Among the countries that already produced and published national codes of corporate governance counts Ghana (Manual
on Corporate Governance in Ghana, 2000), Kenya (Private Sector Corporate Governance Trust [PSCGT], 1999), Malawi (Corporate Governance Task Force, 2001), Mauritius (Report on Corporate Governance for Mauritius, 2003), Nigeria (Code of Corporate Governance in Nigeria, 2003), South Africa (IoD of South Africa, 1994, 2002), Tanzania (Steering Committee on Corporate Governance in Tanzania, 2000), Uganda (Manual on Corporate Governance and Codes of Conduct, n.d.), Zimbabwe (Principles for Corporate Governance in Zimbabwe, n.d.), and Zambia (IoD of Zambia, 2000). In a number of other countries, such as Botswana, Egypt, Morocco, and Sierra Leone similar codes are in the process of being developed.

From “Business Ethics and Corporate Governance in Africa” by G.J. Rossouw