The Institute of Directors Zimbabwe (IoDZ) last week took the first step in responding to industry requirements for inculcation of good corporate governance in the way organisations conduct business.
On Wednesday the IoDZ launched a Midlands Chapter in Gweru, the first step in a process that will see other chapters established in Matabeleland, Manicaland and a Diaspora chapter to be based in the United Kingdom.
The IoDZ is the lead organisation in promoting corporate governance in Zimbabwe. The others are the Zimbabwe Leadership Forum and the Standards Association of Zimbabwe.
The quest to inculcate good corporate governance has extended to state enterprises and parastatals, where the inaugural awards for good corporate governance will be made later this month.
At a national level, the code on corporate governance is expected to be launched before the end of next month.
Global corporate financiers now insist on sound corporate governance as a prerequisite to accessing corporate finance. The four basic principles of corporate governance are accountability, fairness, responsibility and transparency.
Herbert Stanley Mashanyare, Mimosa Mining Company’s executive director, the guest of honour, in commending the IoDZ for launching the Midlands Chapter described corporate governance as the base upon which strong internal control, prudent risk management and generally good performance from an organisation, rests.
Mashanyare was representing Mimosa Mining MD Winston Chitando, who is also current president of the Chamber of Mines.
He described the IoDZ as one of the “key institutions in the development of our nation . . .”
Mashanyare said: “In a world that is increasingly characterised by corporate and public sector crises, bodies such as the IoDZ play a crucial role in promoting ethical values and business practices which have proved, the world-over, to be a major enabler to sustainable economic development and poverty alleviation,”
Since inception in 1958 the IoDZ has played an important role in promoting good corporate governance, training and developing directors, influencing public policy, with a view to contributing to the creation of an environment that is conducive to the economic development and poverty reduction in Zimbabwe.
Mashanyare told business leaders drawn from the Midlands that research has shown companies and organisations in the public sector that embrace good corporate governance, tended to perform better than those that are badly governed.
They also enjoyed better access to cheaper corporate finance, have increased company valuation, better share performance and have reduced risks of corporate crises and failures.
“Barely three years ago,” he said.
“The whole world found itself in financial turmoil triggered by the housing sub-prime lending rates in the United States of America. Zimbabwe was not spared.
“A closer look at the root causes of this crisis which caused untold human suffering revealed that it was largely as a result of poor corporate governance. We are still negatively affected by and suffering from the after-effects of that crisis. Companies find themselves having to try and raise corporate finance under very difficult circumstances characterised by a credit crunch and punitive lending rates, all of which combine to make conducting business unsustainable.”
The drive to roll out good corporate governance is a realisation Zimbabwean business sector is operating generally between 40% and 60% of what it was a decade ago. The work of the IoDZ is seen as critical in helping businesses register increased growth.
Mashanyare said Zimbabwean companies need to leverage on the IoDZ in strengthening their corporate governance frameworks and developing appropriate ethics programmes, structures and instruments. No company, he said, can afford to do less.
Johannes Mudzengerere, the IoDZ chairman, told captains of industry in the Midlands it was critical that business is guided by sound corporate governance principles.
“This is the first step in a journey that is set to see the establishment of chapters in Matabeleland, Manicaland and the Diaspora.
We need to have good corporate governance as our second nature as it is only those with good intentions that abide by the dictates of good corporate governance, as it is simply about doing the right things all the time.”