adminVision 2030
Allen Choruma
The recent wave of corruption scandals in the private sector and State-owned enterprises (SOEs) has exposed serious corporate governance lapses in Zimbabwe, suggesting that some directors in these organisations are “sleeping on the job” and failing to discharge their fiduciary duties effectively.
Vision 2030, which seeks to create an upper middle-income economy by 2030, can only be achieved if corporate entities in both the private and public sectors, which are the engines of our economy, are well governed to ensure they operate efficiently and contribute to economic development.
As high-profile corruption cases in both the private and public sectors spiral out of control in Zimbabwe, the selection and appointment process of directors has come under the spotlight.
According to Engineer Jacob Kudzayi Mtisi, who chairs the ICT Committee of the Zimbabwe Institute of Engineers (ZIE), the selection and appointment of directors in both the private and public sectors needs urgent review.
Below is an extract from Engineer Mtisi on the subject under discussion.
“Due to the prevalence of company failures, there is now need to establish how directors of listed, public and parastatal companies are selected to reduce high rate of company and board failures in both the private and public sectors.
Zimbabwe needs to establish a central database of potential board members and directors and create independent institutions and organisations whose role is to monitor who selects directors and what the motive is.
Research has shown shareholders and other stakeholders (for example, workers) in Zimbabwe have always been ignored in the board selection process, yet they are the ones mostly affected if the boards fail and the company collapses.
We need director independence and completely remove CEOs from board selection, which is prevalent in Zimbabwe.
We need to have a proper board selection process that involves the identification and screening of candidates by a nominating committee of the board consisting of independent directors.
Those who are found to be suitable for board appointment are formally nominated and voted by shareholders.
This kind of transparent process will yield competent and independent board members who will act responsibly and give counsel to the executive.”
Role of the Board
Boards of directors are not there for window-dressing or meeting the requirements of corporate governance best practices.
Directors are there to ensure that the organisations they preside over are well governed and operate efficiently and profitably in order to safeguard the interests of the shareholders.
Boards of directors should effectively discharge their oversight functions over management to ensure that organisations lead prosper and realise value for their shareholders.
Calibre of Directors
The calibre of directors in any organisation, be it a private or public entity, should be high standards given the role that these entities play in the economy of our country.
For example, SOEs and parastatals provide key infrastructure necessary to drive the economy and as such, they also handle large sums of money and are, therefore, prone to vices such as corruption if there are not properly governed.
The selection and appointment of directors who superintend these institutions should be done above board and in a transparent manner.
Distinguished men and women who have proved that they are dedicated to serve and are qualified and experienced to do so should be allowed to serve on boards of SOEs and parastatals.
We have read in the media members of the public questioning the selection and appointment of directors.
There are instances where the public has pointed fingers at ministers and made allegations that they appoint their cronies, friends and relatives on parastatal boards.
These allegations often hold water because the selection and appointment method of directors for public entities is not clear and transparent to the public.
This is why the public, on many platforms, has called for changes in the manner of selection and appointment of directors of SOEs and parastatals.
People have suggested that such positions in public entities should be advertised and shortlisted candidates should be interviewed publicly to ensure transparency and that the best candidates are appointed.
This will enhance good corporate governance and performance of SOEs and parastatals in Zimbabwe.
On a positive note, the Corporate Governance Unit (CGU) in the Office of the President and Cabinet (OPC) has made tremendous strides in strengthening corporate governance in public entities.
The Public Entities Corporate Governance Act is an example.
This Act, if implemented to the letter and spirit, will enhance governance standards in public entities.
Additionally, the CGU within the OPC is working on a system of building a database for directors.
The CGU has issued public notices calling for members of the public with relevant skills, competencies and experience to submit their curriculum vitae for entry into the directors database.
From this database, candidates will be pulled out for selection and appointment to public entity boards.
It is hoped that the CGU will soon issue guidelines on how board members for public entities are selected and appointed in order to gain public confidence in the governance of such entities.
Allen Choruma can be contacted on e mail: [email protected]
Bongani Ndlovu
Online Reporter