CORPORATE governance failings have been closely linked to corruption in Zimbabwe. This week, our reporter Ronald Muchenje (RM) spoke to corporate governance expert Canaan Dube (CD), who says there is a need for a paradigm shift from corporate governance to “personal governance”. Below is the interview:
RM: Recently, United Kingdom minister for Africa James Duddridge made comments that pointed to the fact that investors were shunning investing in Zimbabwe due to poor corporate governance. How serious are corporate governance failings in Zimbabwe?
CD: Since 2010 or thereabout, there have been some remarkable developments on the corporate governance space.
First was the bringing in of the national code on corporate governance which was launched on 9th April 2015. This was a milestone event which was embraced by both public sector and private sector participants in the leadership space.
On the part of government, they realised that just stating the rule book with all the dos and don’ts on how to govern entities for corporate objectives was not enough. So on the 8th of june 2018, government decided to turn the voluntary code into law.
If you go to the Public Entities Corporate Governance Act and its regulations, you will see that the first schedule to the Act is the voluntary code attached. In other words, government has seen it fit to force compliance with corporate governance principles in the public sector through turning the voluntary code into law.
So for public commercial entities, it is mandatory for the leaders in that space to comply with each and every corporate governance principle in the voluntary code launched on the 9th of April in 2015.
I would say corporate governance challenges in Zimbabwe are not as deep as they were in 2009. So Doddridge’s comments may be far removed from the developments I’ve just indicated.
Yes, there is still some work to be done to confront and halt acts of corruption which are bedeviling the public and private sector leadership of entities. That is being tackled but not at the space and pace or speed at which we all desire and want to see.
RM. The country has been struggling to attract investment. How much has poor corporate governance contributed to investor flight in Zimbabwe?
CD: In part, the poor corporate governance outlook in Zimbabwe has portrayed a very unfortunate picture of a country which is corrupt, of a country which takes time to process investment applications, of a country which can see investment coming through and much of it going into government coffers without any progress being achieved.
Let me say this: from a historical perspective, investment was driven away when the land question became an issue.
There was the need to create a balance between giving land to those who deserved it but at the same time doing it in a manner which was accommodating vested interests and in a manner which continued to protect investments.
What did government do? If you go to the 2013 constitution, it’s clear that the land issue was recognised as irreveseable.
But there was a commitment to compensate those who lost the land and you remember that recently there have been some efforts to compensate some farmers.
To me that is a commendable approach and a step in the right direction to ameliorating concerns and fears about property rights in Zimbabwe.
RM: Can you take us through the efforts you have made to instill and promote corporate governance in Zimbabwean companies?
CD: I’ve put together a code to guide behaviour by those who govern and control those who lead entities, both private and public sector. I’ve been at workshops trying to educate leaders of entities on the benefits they reap by leading these companies in strict adherence to corporate governance.
Last year, I did no less than 150 workshops involving public sector leaders and teaching them about principles annunciated in the Public Entities Corporate Governance Act.
That gave me an insight into the eagerness of the public sector leaders to be taught what is good for this country, for the revival of the public sector’s contribution to GDP which at its peak was sitting at 40% and a few years ago had gone to 5% if not less than that.
I also gained some insights on how the public sector is taking the corporate governance reform efforts by government seriously and we have just finished as Zimbabwe Leadership Forum the putting together of four manuals which will aid those that will participate in the workshops in understanding the Corporate Governance Entities Act.
What I am saying is there is heightened awareness by those who govern and control public entities about the need to do what is good for the country.
RM: During the years you handled corporate governance issues, what do you think have been the sticking issues around corporate governance in Zimbabwe?
CD: The issue of corruption, which is one at the centre stage of corporate governance. Corruption is a choice which I’ve learnt stems from individual choices made by those that exploit opportunities to gain advantage over weak systems.
I’ve asked myself: Is it the rule book which will get people to change? In other words, do you get people to change through coercion or persuasion?
In both instances, in the end government can legislate and corporate governance practitioners can go into the whirlwinds of teaching individuals, but the end decision lies with the individual.
So I’m urging a radial mindset change to a paradigm shift which is radical. Gone are the days when we used to focus on enforcing the rule book to coerce to change. That is not giving us the outcomes we deserve to see.
Although government has done all it can to make the code — an extension of the legal system — still people are not changing from their corrupt ways.
Recently, you saw the city council scandals about the use of wetlands. Most of the leaders in that space have found their way into the courts for the wrong reasons.
Our focus should be on personal governance as opposed to corporate governance.
I’ve argued and continue to do so that it starts with you, whether or not to be corrupt, therefore corporate governance is your personal choice that will determine how you lead the entities.
RM: What do you think is the way forward in embracing corporate governance?
CD: Preaching, persuading people to change their value systems. Do I believe in a personal creed which speaks to the dos and don’ts?
When we talk about how people must behave, let’s emphasise that people must be one foot forward in prescribing to their personal creeds. What is it they hold dear?
I think if we have top leadership in the cooperate entities — the listed companies — leading by example, showing that the way they govern themselves can be translated into how they govern entities, much can be seen and a new trajectory in the behaviours we all expect to see can be achieved.
RM: What is your comment on the pace at which corporate entities are embracing corporate governance in practice?
CD: I must again reiterate that there has been some change and remarkable change since 2008 to 2009 to what is happening now. We have seen banks collapsing, seeking bricks instead of monetary transactions. Many people were involved in scandals, we still have them. Thankfully for the financial sector, things have improved. We no longer have banks collapsing if we were to compare to institutions back then. There has been an improvement, although things could have happened at a better scale.
RM: What do you think has been contributing to this?
CD: Abuse of political economic power and also just letting loose all the desires of human beings. Once you have power, you want to abuse it, you want to excel in doing the wrong things to the prejudice of those you lead. It comes down to failure of personal governance as opposed to corporate governance. The shift must happen and we must understand that corporate governance without an anchor of good personal governance is a sheer waste of time in my view.
RM: Lack of proper corporate governance systems has also played a key role in promoting corruption. What is your comment?
CD: The link is clear. Corporate governance, put simply, is a system by which entities are governed, directed and controlled in order to achieve their objectives.
The word control is key. If any business has no systems of managing risk and ensuring that risks are not taken willy nilly to achieve a purpose, then corporate scandals will continue to be the order of the day.
So if, as we have seen in the City of Harare space, people have clearly been unmindful of corporate governance and that has led to corruption and all the scandals we have seen.
RM: What efforts are needed on the regulatory side to ensure good corporate governance in practice?
CD: Like I’ve said, government has enacted the voluntary code into law. Although it’s mandatory, I think it is a remarkable effort by government.
This was demonstration of political will to tackle corruption and ensure that corporate governance is part of the culture of those who lead entities, but still I come back to how individual governance and corporate governance must combine to introduce the culture of leadership we need both in the public and private spaces for the economy of Zimbabwe.
RM: Going forward, what is your outlook for your quest for corporate governance in practice?
CD: It looks good and government has created a platform for hope. That at least shows there is political will to ensure that we turn the corner as a country and introduce the Zimbabwe we want and deserve.