CORPORATE GOVERNANCE
- AN OVERVIEW
A PRESENTATION TO THE
THE BOARD OF DIRECTORS AND THE MANAGEMENT OF
Zambia Information and Communications Technology Authority
(ZICTA)
BY
Chabuka J. Kawesha
Member – Institute of Directors (IOD)
Member – Chartered Institute of Arbitrators (CIArb)
Member – Economic Association of Zambia (EAZ)
Board Member – Pension & Insurance Authority (PIA)
19th February 2010
Siavonga ZAMBIA
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Presentation Structure
1.
2
3.
4.
5.
6.
What Is Corporate Governance?
Corporate Governance Means Leadership
Five Elements of Corporate Governance
Principles of Corporate Governance
Corporate Governance System
Agency And Stewardship
7. Corporate Governance Definition in detail
8. Corporate Governance Code of Conduct
10. Competing Tensions
11. Why Corporate Governance?
12. Aligning Corporate, Shareowner, Public Interests
13. Zambia Telecoms -Towards a New Governance
14. Telecoms – Towards a New Governance
15. Conclusion
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What Is Corporate Governance?
“Corporate governance is the system
by which companies are directed
and controlled….”
Sir Adrian Cadbury, UK, 1992
Private
Public / State Owned Enterprises (SOE)
Now we have PPP Setups
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Corporate Governance Means Leadership
 For efficiency (Principal-Agent-Industry Relationships, etc)
 For probity (honesty, Integrity, honor)
 With responsibility
 Both transparent and accountable
 Adopt best practices
 Enhance an institution’s brand and authority

Encourage participants to be “change agents” of corporate governance
 Strengthens board effectiveness and enhances directors’ professionalism
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Five Elements of Corporate Governance
Protection of (minority)
shareowner rights
Strong regime of
disclosure and transparency
Appropriate control
environment and processes
Good board practices
The five key elements of
good corporate governance
Strong commitment to corporate governance reforms
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Source: Global Corporate Governance Forum / IFC
Principles of Corporate Governance
1.
2
3.
4.
5.
6.
7.
8
Board Structures and Processes.
The Board of Directors.
Composition of the Board
Accountability of the Board
Director Training.
Director Insurance
Board Performance Evaluation.
Corporate Governance Code of Conduct
6
Corporate Governance System
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Source: Global Corporate Governance Forum / IFC
Agency And Stewardship
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Source: Global Corporate Governance Forum / IFC
CG Definition in detail
1.
The key objective in Corporate Governance is to ensure that the Company or
Organisation is governed in a way that is efficient, responsible, accountable,
transparent, and with probity (integrity, honor, honesty)
2. The relationship between the shareholders and the Board of Directors is at the
centre of many of the problems that arise in Corporate Governance
3.
4.
5.
Many of the guidelines in the codes of conduct of Corporate Governance and
codes of best practice are directed towards reducing the potential for conflict,
between the two stakeholder groups
The Directors may be tempted to take risks and make decisions aimed at
boosting short term performance
Many shareholders on the other hand may be more concerned about the longer
term, the continuing survival of their company and the value of their
investment
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CG Definition in detail cont/…
6.
Corporate Governance seeks to harmonize the interests of
Shareholders, Directors, Management, Employees and
other stakeholders as well as the interests of the
community in which the company operates.
7.
Corporate Governance also encourages Organisations to
engage in consultative dialogue with government aimed at
improving the policy, rules and statutory regulations
guiding the operations of the Organization.
7.
Essentially, governance addresses the leadership role in the
institutional framework of organizations.
8.
The Directors are squarely at the centre of this leadership
role in the organization.
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Corporate Governance Code of Conduct…
The Board is responsible for the formulation of a
code of conduct of Corporate Governance to
guide Corporate Governance practices in the
Organisation.
The code should cover the following matters:
1.
 Clarifying the role of






Shareholders.
Responsibilities to key
Stakeholders.
Role and functions of the
Board.
The Role of the Chairman.
Appointments to the Board.
Directors remuneration.
Disclosures of information by
Directors.
 Supply of Information to
Directors.
 Directors’ Training and
Development
 Accounts: Audit and
Disclosure
 Scope and Duties of Auditors
 The Role of Board Committees
 Code of Ethics
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Competing Tensions
“If management is
about running
business,
governance is
about seeing that
it is run properly.
All companies
need governing as
well as managing.”
Prof. Bob Tricker,
1984
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Source: Global Corporate Governance Forum / IFC
Why Corporate Governance?
 The interest in the systematic way in which companies, and other
Organisations are directed and controlled is relatively recent.
 It was stimulated in the first place by concerns about fraud and later
by the failure to correct evident managerial incompetence.
Recently, there has been more concern to facilitate investment and
capital flows.
 The last 20 odd years have seen a proliferation of corporate scandals
and corporate failures all over the world including Zambia.
 Most of these failures have been traced to either the collapse or the
non existence of good corporate governance practices in the affected
organizations.
 Here are some examples both from the Zambian scenario as well
as the international corporate world:
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Why Corporate Governance?
1.
Bank of Credit and
Commerce Int’l, BCCI
2. Meridian Bank
3. Commerce Bank
4.
5.
6.
7.
8.
Prudence Bank
Zambia Airways
Agriflora
Enron &
WorldCom
 Thus the focus on Corporate Governance achieved in
the last 20 odd years has put the matter of Corporate
Governance on the agenda of boards of directors
around the world. TOYOTA 2010 ! 8m car recalls ???
 Corporate Governance has become universal because
of its importance to building investor confidence and
strong capital markets across the world.
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Why Corporate Governance?
Good Corporate Governance therefore seeks to achieve the
following economic ideals:
1. Attract investors – both local and foreign – and assure them that their
investments will be secure and efficiently managed, and in a transparent and
accountable process;
2. Create competitive and efficient companies, business enterprises and
organizations.
3. Enhance the accountability and performance of those entrusted to manage
organizations;
4. Guard against fraud and Corruption.
5. Seen from this perspective, it becomes clear that Zambia like the rest of the
world needs well governed and managed business enterprises and
organizations that can attract investment, create jobs and wealth and
remain viable, sustainable and competitive in the global market place.
6. It is against this background, that good Corporate Governance, has become
an imperative pre-requisite in all Companies and Organisations, big and
small, in order to achieve sustainable National Economic Advancement.
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Aligning Corporate, Shareowner, Public Interests
“An effective system of corporate governance must
strive to channel the self-interest of managers,
directors and the advisors upon whom they rely
into alignment with the corporate, shareholder
and public interest.”
Ira Millstein
Senior Partner, Weil Gotshal & Menges, LLP
Senior Associate Dean, Corporate Governance,
Yale School of Management
Chair Emeritus, the Forum’s Private Sector Advisory Group
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Zambia Telecoms -Towards a New Governance
Policy, Regulation and
Operations
Government
(Policy Development)
Direct Influence
Department of
Communication/
ZCC
Regulator
Market /
Stakeholders/
Zamtel
Board of
Directors
Indirect long-term
influence
(ZICTA)
Notable challenge: Principal-Agent
Relations
Zain, MTN,
Zamtel/CellZ &
ISPs
Market
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Telecoms – Towards a New Governance



End of the old regime of ‘inter-national’ telecom based on national
sovereignty and correspondent relations
In comes the Global Information Society – Requires a new scheme of
rights and obligations and new regulatory principles. Such a scheme
is needed to support the operation of free and fair markets, to govern
business and social relations.
In proposing , at the ITU World telecommunication Development
Conference in Buenos Aires in 1994, the nations of the world should
cooperate in building what is called a ‘global information
infrastructure’, US Vice-President Al Gore set out 5 Principles:





Encouraging private sector investment
Promoting competition
Providing open access to the network for all access providers
Ensuring universal service; and
Creating a flexible regulatory environment which stays abreast of
rapid technological and market change
In these 5 principles – internationalism, universalism, regulatory symmetry,
regulatory independence and open access – there lies the cornerstone of
a new governance structure for global telecoms
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Telecoms – Towards a New Governance
 Globalization: The knowledge economy
 Governance paradigm shift: Neo-liberalization
 Technological change, including:
 Digitalization and convergence
 Network modernization and rollout
 Global institutional pressures, including:
 Increased role of supranational institutions
 WTO commitments
 Economic pressures, including:
 Need to attract FDI into telecoms sector
 Market liberalization – Sector growth
 Privatization of the incumbent – revenue/FDI
 Demand for new services – from POTS to PANS
 Political pressures, including:
 Zambia – Social and political transformation
Conclusion
Accordingly, ZICTA should continuously review all the currently
installed instruments of Corporate Governance in the and
ensure that the Authority remains up-to-date. These should
include the following areas amongst others:
* Composition of Boards of Directors and Management
* Composition and responsibilities of Committees of the Board
* The Organisation’s Corporate Governance Code of Conduct
* The Organisation’s Corporate Values
* Maintain membership of the Institute of Directors of Zambia
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Thank you
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Chabuka J Kawesha
Is a Member of the IOD since 2006 and trainer in Corporate Governance since 2008. Kawesha is also a
Member of the Economics Association of Zambia (EAZ) and the Chartered Institute of Arbitrators
(CIArb). He trained as a mediator at the University of Stellenbosch (SA) and under the ZCDR
(Zambia). He mediates regularly in Zambia and while in South Africa mediates under Equillore.
Under community initiatives he has been as member of Rotary International since 1996 and a
recognized Paul Harris Fellow (PHF)
Kawesha, with work experience of 6 years in the Petroleum energy sector and 11 years in the ICT sector
(Zain) has studied for a Doctorate in Telecoms (AIU), Master in International Management (RU),
Diplomacy (ZIDIS) and currently a Wits university student at Masters Level in ICT Policy and
Regulation. He has authored up to a dozen ICT industry articles, served as a resource at the COMESA
Business forum and currently sits as member on the Board of Regulators for the Pensions and
Insurance Authority (PIA).
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