THERE is no reason why those who serve in the public sector should not emulate the standards of corporate governance that are in the private sector, says finance permanent secretary Mukuli Chikuba.
Speaking at the launch of the book ‘Corporate Governance: A commentary on Zambia’ at Hotel InterContinental in Lusaka last Friday, Chikuba said most of the legislation that governs corporate governance, particularly in the setting up of boards, sees the same individuals that serve in the private sector also serving in parastatals.
“Why is it that when they are with [private companies] they operate under the ethics of the corporate governance that is there and when they serve on a parastatal, they don’t? So those are some of the questions we need to start asking ourselves and part of the response to that is the pieces of legislation that are coming on,” he said.
“They are directives that come from regulators from time to time and we try to update them with good corporate governance that is at an international level. In short, we need to carry out an introspection on ourselves as members of boards of parastatals and members of boards of these private companies.”
Chikuba said another aspect of corporate governance issues emerge in the annual Auditor General’s report, noting that most of those that come out in private companies are not published.
“There are issues in private companies as well and … it is important that we conduct ourselves in a way that is ethical and we ‘serve’ and not ‘sit’ [on boards],” he said.
Chikuba noted that with recommendations of best practices from across the globe, married with local practices, he saw no reason why public sector companies couldn’t be turned into profit-making entities.
He said the provisions of the companies Act were far-reaching for those that serve on boards, while the public finance management Act requires individuals, particularly in the public sector, to personally be held responsible for their actions and decisions.
“And again for those of us that have a culture of reading, you will know that the companies Act does actually follow you individually, be it private or public sector company. So again those are things we should take into account; when you are being appointed to a board you shouldn’t take it lightly, you should take it with the seriousness it deserves,” Chikuba said.
He said ‘Corporate Governance’ had come at an opportune time as Zambia was discussing responsibility, accountability and other issues that were predominant in every boardroom.
“The book outlines some of the international best practices from corporate governance, at the same time bringing on board the Zambian perspective. As you read the chapters of this book, you clearly appreciate that the book caters for people from all sectors including those without a legal background and those of course with a legal background. The book has focused on providing a commentary-like approach on various subjects, very easy to assimilate the concepts in them,” he said.
Chikuba urged those serving in management boards of companies to get copies of the book and further commended its author Walubita Luwabelwa for realising the importance of contributing to the wellbeing of knowledge in Zambia.
“This has come at a time when in most of our upbringing we traditionally think that writing books is the preserve of academicians … and not young professionals like yourself. So you have broken the barrier and … I think this will go down in the history of the country and we are very proud of you at your age to have made this achievement,” he said.
And presenting a summary of the 87-page book, Law Association of Zambia president Eddie Mwitwa said ‘Corporate Governance’ revealed Luwabelwa’s “very high levels of thinking” about corporate governance in Zambia and is written in a manner that is easy to read and invoke further debate for purposes of policy reform.
“Corporate governance relates to a process of management control aimed at achieving corporate efficiency and profit by effecting responsible corporate behaviour and considering the effect of corporate behaviour on various stakeholders,” he said.
Mwitwa said the book touches on the benefits of corporate governance, including preventing corruption and other unethical business practices, which in turn encourage market discipline and transparency.
He said key themes cited include the management structure of a company, composition of the board, separation of the chairperson and the CEO, codification of the common law duties of directors and shareholders’ activism and the role of the company secretary, as well as audit committees for disclosure as well as transparency.
“I personally highly recommend the book especially to those that are involved in the running of companies. I believe it will be an invaluable resource for board members, company secretaries, law students, legal practitioners, business owners, economists and indeed anyone interested to learn about corporate governance,” said Mwitwa.
And Luwabelwa, who is chief compliance officer at Stanbic Bank Zambia, said progress had been made regarding governance codes in certain sectors.
“We have also made progress when it comes to public listed companies, the LuSE [Lusaka Stock Exchange] of course has its governance codes. However, I think the two areas that have been quite topical of course are your non-listed companies, your private companies and your SMEs. And when some of these things were coming out of the book, there was an issue of how do we domesticate some of these codes that reflect the nuances of our country Zambia,” he said.
Luwabelwa said the book asks whether “the cut and paste” of legislation from other jurisdictions was still effective for Zambia.
“At least I can confidently say that we have domesticated to our context a number of these codes but we still have some work to do. I think it was there to build on some of the previous work that I had done even at post-graduate level to just put some thoughts down. It was really not to be a catch-all … but it is just there to spur discussion,” said Luwabelwa.
“To the student it’s a handbook that can be used; to the experienced board member it can be a reminder; to the policy maker … they are just some thoughts that can be adopted – some have already been adopted. And to the busy practitioner…it’s something you can put on your bedside and flip the pages as and when you want to be reminded on some certain things.”