Monday, June 17, 2024

Corporate Governance- A Vexing Problem In New Dawn: Inexperience Interference Micromanagement

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By Chibamba Kanyama

In the past four weeks, two Chairpersons of public sector boards separately told me they planned to step down. They had serious concerns about the invisible hand that interfered in their work. They feared their continued stay as directors of the respective institutions compromised their ability to professionally provide oversight. They accepted to be part of the respective boards believing that the new government was serious about professionalizing governance systems in the public sector.

I advised strongly against stepping down. The new Government was still in a transitional stage with a lot of things still falling in their rightful place. If the motivation to resign was purely on ethical grounds, I encouraged them to resign. However, if the reason for resigning was purely because of bad governance practices and procedures, it was easy to fix concerns with time.

As British politician Baroness Lynda Chalker once said, ‘‘Corporate Governance does not exist in a vacuum. It is profoundly influenced by the political and economic environment of each country.’ It is, therefore, expected there will be teething problems for the new government as it seeks to stabilize the governance systems in the public sector.

To its credit, the new government has, to some extent, done its best to bring on board quite well qualified individuals to oversee the performance of the public sector as independent directors. This is in line with the party manifesto that states in part on corporate governance, “In light of rising cases of abuse of office in both the private and public sectors, a key focus of our effort will be legislation aimed at improving the corporate governance environment in the country. This will include strengthening qualifications for directors and board appointments, insolvency laws (qualification and appointment of practitioners) to guard against recent cases of blatant abuse of the process by political players.’

In the past year, there has been a significant roll out of training programmes on corporate governance for newly installed directors in the public sector. As a corporate governance practitioner myself, I felt hugely motivated offering mentorship to these men and women on the belief the political environment was well set to support good governance practices in the public sector.

Unfortunately, I am beginning to be anxious about the level of seriousness that the New Dawn Government attaches to corporate governance. I am equally concerned some of those we have trained and capacitated as directors are still confused about their roles and responsibilities on the respective boards. Three issues are of concern:

INEXPERIENCED DIRECTORS

Not everyone appointed to these boards has basic appreciable competence and stamina to execute functions of director at board level. Parastatals, statutory bodies and other government agencies anchor the success of the country. Most of these institutions define the success of the private sector. A well governed Energy Regulation Board, Zambia Environmental Management Agency, National Roads Fund Agency or any other institution reflects in how the private sector efficiently does its own business.

You cannot, therefore, afford to appoint individuals without any track record of leadership and management at a reasonably high level to these boards. Ministers should look beyond friends in appointing directors. It is accepted any government that comes to power would have had individuals that may need to be compensated for their contribution. That compensation can be in any other areas but not on boards.

There is need to search deeply in the market to find individuals who are better qualified to perform the function of director. The moment you have individuals without an iota of leadership acumen in the public sector, problems emerge, and they need to be addressed.

POLITICAL INTERFERENCE

There are indications the invisible hand is still alive in the governance of public bodies. The debate among governance technocrats lately has been whether the government in power should completely maintain a hands-off approach on the performance of public entities soon after appointing the board of directors. The position by some of my colleagues is that ‘government input’ is necessary. I have no problems with that if input is given under acceptable governance procedures and processes.

Procedurally, government input is given to the organization through the board of directors and this happens in two ways. First, government usually has representation on these boards. The reason is to facilitate for government (shareholder) input. Second, the annual general meetings exist for this government input.

My concern is that some government officials are ignoring this, giving instructions directly to management. In one case, the Chief Executive Officer carried out a serious activity without board approval. When approached by the Board, he replied the directive was given by the minister. This should never be allowed in the New Dawn. It frustrates Board members.

MICROMANAGEMENT

It is not only the Ministers or other government authorities causing tension in governance systems of public entities. I have also come to realize some directors do not know their boundaries.

It is a pity some Board chairpersons have turned themselves into operatives, executors of their own directives, demanding more in terms of personal compensation from the institutions than they are expected to. This is the reason public sector boards are beset with challenges despite induction programmes facilitated for them.

Anything that borders on micromanagement is a serious compromise to acceptable corporate governance standards. We can surely do better than this under the New Dawn Government. Apparently, Dr. Situmbeko Musokotwane, the Finance and National Planning Minister, plans to address dysfunctional governance systems in State Owned Enterprises as per the 2023 National Budget.

2 COMMENTS

  1. It is important that Zambians buy shares that Government has in these parastatal companies to go private. This is the only way we can improve our economy. Government must concentrate on running the country and not to be in business with its citizens. All what Government can be doing is signing some understanding with the companies.

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