Implement corporate governance code now

to the economy.

Yet, comparatively minute conversations have been directed towards corporate governance in public sector organisations that debatably have as much impact on the lives of people globally.
It is therefore, agreeable that though the origins of corporate governance reform lie in the private sector following the demise of corporations like Enron, WorldCom, Bank of Credit and Commerce, PolyPeck International etc, attention should also be given to governance of public sector organisations.

Within the Zimbabwean context, there are still a variety of notable State agencies, enterprises and parastatals in operation such as Air Zimbabwe, Grain Marketing Board, National Railways of Zimbabwe, etc, the majority of which are generally funded by the Treasury.
The idea of State enterprises is common across the world where various governments have been widely involved in the direct ownership of companies, production and distribution of a variety of goods and services.

In Zimbabwe the State enterprises and parastatals have room for improvement when it comes to their performance and management.
Good governance structures within these SEPS can result in meaningful use of the taxpayers money and can help the Zimbabwean economy reach its full potential.
It is therefore crucial to state at the onset that public money is not the same as private money, therefore the parameters of accountability should be more rigorous and stringent.

Dowdall and Martin (2011) stated that there are four principal reasons why this is so:

• It is compulsorily extracted from the taxpayer on the authority of elected representatives.

• Public money can only be used for the purposes it was authorised in line with the concept of regularity.

• Public bodies are required to conduct their business in accordance with recognised standards of propriety.

• Public bodies must be able to show that they have sought value for money. As such they should therefore be subject to different, but stringent, standards of accountability and transparency in how they operate.

These important defining characteristics of the public sector contextualise the need to have strong underlying principles of public sector corporate governance.
Just recently there was an issue of some State enterprises that have been operating without substantive boards for as long as three years.
The questions to ask are, to whom is the chief executive officer and his management team accountable in such instances?

How is he/she answerable for his/her performance and that of his organisation?
It is therefore interesting to note that Government departments and public bodies make choices and take decisions on a daily basis that affect all of us as citizens.
Understanding how these choices and decisions are made is, therefore, a matter of significant public interest particularly when one looks and considers the pillars of good corporate governance.

One, therefore, wonders whether it is necessary to continue having some of the State enterprises and parastatals more so when the world and business environment for the role they once played has long moved on.
I have been following with interest the latest calamity of bad governance, which I have dubbed the “road licensing fiasco” where hundreds of motorists have been forced to sleep in queues in order to be compliant with the laws of the land.

Simple logic would have been for the executives and board at Zinara to be more proactive, i.e., by creating a platform that would make it easy for motorists to get the licence without the current madness and drama.

This to me is a classic example of why it is now overdue and necessary for SEPs to adopt the Corporate Governance Framework for State Enterprises and Parastatals that was initiated by the Ministry of State Enterprises and Parastatals in November 2010.
Without good governance structures in Government agencies, departments and public sector organisations, the public will continue to suffer needlessly.

In recent years there has been no shortage of examples of serious failures of governance in the public sector. One that quickly jumps to mind is Air Zimbabwe, which was once the pride of Africa.
It is only when one tries to fly to a neighbouring country like Malawi just a stone’s throw away, that one realises the importance of having had good governance in place at our former national airline.

I say former because it will take more effort to restore the consumer confidence in their brand and for it to go back to its glory days where it was fashionable to be part of their tradition of caring.

Such failures of State enterprises continue to contribute to an erosion of public confidence and the question as to whether our hard-earned tax should be used to fund such enterprises remains unanswered in its entirety as some of the SEPS are still here with or without a board.
Is it the bad governance on the part of the gatekeepers of the organisation that is resulting in the inefficiencies currently prevailing or is it complacency that has crept in over the last decade which we need to work on to change the mindset and status quo.

Good governance is, therefore, critical and essential for the delivery of much needed services to the citizens of any country, be it air transportation, water, electricity or a good road network.

The widening of corporate governance into public sector bodies has been evidenced in the deliberations and development of recent best practice guidance that were formulated in the United Kingdom and Ireland.

Her Majesty Treasury’s Review of Corporate Governance in Central Government Departments (2010) notes four key areas of possible changes to guidance, among others.

These are clarification of board function and purpose, clarification of the role of ministers in relation to corporate governance, emphasis on risk management and emphasis on the induction, training and development of board members.

In Ireland, the Code of Practice for the Governance of State Bodies (Department of Finance, 2009) highlights the widening impact corporate governance can have.

It points out that “high standards of corporate governance in all State Agencies, whether in the commercial or non-commercial sphere, are critical to ensuring a positive contribution to the State’s overall economic efficiency and competitiveness”. The approach adopted by Ireland has become increasingly important for the performance and accountability on the gatekeepers part.

As our country evolves and joins countries that have potential to grow the fastest, it therefore becomes imperative that the corporate governance framework for parastatals and State agencies be implemented both in theory and practice.
This will make the State agencies, parastatals more effective organisations that truly serve a useful purpose for the benefit of the ordinary Zimbabwean.

• Terrence N. Chimanya, MSc, LLB (Hons), ACIS, MCMI is a Corporate Governance Practitioner and Senior Manager — Governance, Risk and Compliance with PricewaterhouseCoopers Zimbabwe. He writes in his personal capacity as a corporate governance practitioner. Terrence can be contacted on [email protected]