Africa grows under corporate governance principles | KPMG | GLOBAL

Africa’s economy continues to develop under robust corporate governance principles

Africa grows under corporate governance principles

Most countries across Africa have robust corporate governance codes of practice at present, as economic prosperity increases across the continent.

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A new joint study by ACCA (the Association of Chartered Certified Accountants) and KPMG has found standards of corporate governance code are well aligned with OECD (Organisation for Economic Co-operation and Development) Principles of Corporate Governance released in 2015.

The report, Balancing Rules and Flexibility for Growth, focuses on 15 countries across Africa, and examines the corporate governance requirements for listed companies against the benchmark across four tenets of corporate governance. These are derived from the OECD principles and include: leadership and culture, strategy and performance, compliance and oversight, and stakeholder engagement. Governance requirements are assessed based on their clarity and completeness of content, degree of enforceability and availability of relevant requirements.

While one-third of the countries studied by KPMG and ACCA have recently reviewed their corporate governance codes, now could be the right time for others to take stock and make improvements, given the impetus of the new OECD Principles and the need to encourage more foreign direct investment.

The study found all 15 African markets have a corporate governance code or equivalent in place, with most countries adopting their first codes from 2000 onwards.

Irving Low, Partner and Head of Risk Consulting, KPMG in Singapore, said, “A number of countries have had corporate governance codes for some time and the experience of implementing them has created practical learning points. The African markets will be able to leverage the lessons learned in the evolution of similar codes in other markets.”

The report ranked South Africa number one, having adopted the largest number of OECD Principles – with Kenya, Mauritius, Nigeria and Uganda completing the top five. Overall, a majority of markets (10 out of 15) have aligned their corporate governance requirements with more than 80 percent of OECD Principles.

“We hope this study can contribute to raising the standard of corporate governance requirements across Africa. Each market needs to consider their specific political, legal, economic, social and cultural environment when making decisions about developing, defining and enforcing corporate governance requirements,” said Irving.

Looking at the comparison within this study, and from phase 1 of the same report which looked at 25 markets globally, Irving commented, “Implementing corporate governance well will prepare companies for the opportunities that come with the anticipated high growth rates of the African markets.”

Speaking about the findings in relation to Africa’s development, Jamil Ampomah, Director, Sub Saharan Africa, ACCA, says, “As these markets grow and evolve, more awareness and effort will be needed to strengthen remaining critical areas of corporate governance, particularly for remuneration structures, performance evaluation, risk governance, and board composition and diversity.”

Most markets mandate the basic corporate governance requirements such as financial disclosure, shareholders’ rights and the role of the board, supplementing these with non-mandatory guidelines for good practice.

“Achieving the right balance between rules and flexibility is a tricky task for any country, but of fundamental importance for those where corporate governance is critical to support robust economic growth,” continues Jamil. “Although decisions about how to shape a corporate governance framework and how fast to do so may be unique to each market, and there is no ‘one-size-fits-all’, there is value in continuing to compare and incorporate internationally accepted standards of corporate governance.”

The 15 countries examined in this study were Egypt, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Morocco, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, Tunisia, Uganda and Zambia.

For media enquiries, contact:

Monique McKenzie, ACCA Newsroom
E: Monique.mckenzie@accaglobal.com
T: +44 (0)20 7059 5030
M: +44 (0)7725613447
Twitter: @ACCANews

Kelvin Lee
External Communications
KPMG in Singapore
E: kelvinlee1@kpmg.com.sg
T: +65 6507 1534

Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 188,000 members and 480,000 students in 178 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 100 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: ACCA

About KPMG

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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