Corporate Governance in Sierra Leone
Best practice in corporate governance will spur growth in private sector to boost Sierra Leone economy
Following the decade long civil conflict which destroys lives and properties of the country, Sierra Leone made remarkable progress pre-Ebola. The country has picked up it bits and pieces with feasible programs and reforms that will pave the way into a middle income country by 2035. The country is on course in maintaining a democratic and resilient state. (Photo: Minkailu Mansaray, author)
Sierra Leone is endowed with natural resources but the country has not been able to maximise it earnings or harness it resource potentials to the fullest.
Macroeconomic performance has been robust during the past ten years and in the era of the present government. The country has made significant progress in good governance with the establishment of institutions to build on the gains of it democracy and state building, and the trajectory is good.
However, in other to spur growth, actions of both the public and private sector must be complimentary to drive development. The growth prospect of the country hang in the balance as the private sector is not pulling it weight. The public sector has witness significant transformation and reforms to improve performance are paying off through internal and external benchmarking with regional bodies. The Performance Management Unit in tracking progress and scrutiny of state institution is worthy to be noted.
The private sector on the other hand do not have the correctness to match the flavour of the public sector and this mismatch is causing undue hardship and counter productive to the Agenda for Prosperity (A4P) . In order to jump start the economy and to align the private sector with Ministries, Departments and Agencies (MDAs) there is a yawn for best practice in corporate governance to attract much needed Foreign Direct Investment (FDI)
The need for corporate governance practice cannot be said enough.
Over the years we’ve witnessed chains of event of corporate failures and scandals in the world and Sierra Leone in particular and this is attributed to poor corporate governance. The collapse of BATA shoe co and Aureul Tobacco Company in the 80’s; IBTI and MERIDIAN BANK in the 90s and London Mining of recent could be attributed to poor corporate governance. Fifty Six years on post-independence, it is sad and a cry to a beloved country that we are yet to set up regulations akin to South Africa King’s Report that oversee the way directors are manage and control. There is empirical evidence that the private sector is been the catalyst to economic growth in sub- Sahara Africa in recent years. Any business environment that lacks the enforcement either ‘rule or principle’ based to manage the conflict of interest between owners of equity and managers of the firm will always result in chaos, arrest acquittal and discharged. The author hold reservation for the Organisation for Economic Co-operation and Development (OECD) guidelines on Corporate Governance in terms of relevance and adequacy in the Africa Business platform as one size do not fit all.
For firms to survive and grow the interest of stakeholders should be well managed. The massive bankruptcy and criminal malfeasance of Enron, world com, Cadbury PLC, and Africa Petroleum is associated with poor governance and systemic to the collapse of IBTI, Meridian Bank, to name only a few. Today we’ve witness the decline of giant companies within the mining sector such as Addax and London Mining. These companies were major revenue earners/contributors to the country’s GDP but short lived.. The country need to attract, retain and secure FDI for sustained growth otherwise will continue to swing in the pendulum waiting for bailout from international agencies such as the World Bank. The donor dependency culture can be reversed and only if the government can nurture a culture of self-sufficiency and empowerment through building the structures or system that will support and solidify our development agenda inclusive of an ambitious private sector- led growth programs.
The romantic relationship between CEOs and the Board of Directors that led to bank failures in the past would not have occurred in the first place if corporate governance structure or system was in place. In spite of the seemingly improvement in infrastructure with road networks linking farmers to market, energy rationalisation and implementation programs and a peaceful and stable business environment, a country can’t go far without a stock exchange, credit rating agencies, and an independent Accountancy body. Commercial banks are also handicap due to lack of sovereign debt rating. Best practice in corporate governance will create the need for a stock exchange and other brick and mortar and intangible infrastructure within the value network that support business activities will emerged, either deliberate or Freewheeling.
The country need to detoxify or re-engineer it processes, systems and structures for business efficacy and remove barriers to make our Business environment more thriving and competitive.
The country need to zone out and benchmark with her Eastern and Southern African counterpart to bring efficiency and best practice in the private sector particularly within the financial sector.
To give the local content policy it weight and meaning, the government should begin to support the Institute of Chartered Accountant of Sierra Leone (ICASL) in their mandate and objective to begin to examined and award it on chartered/certified accountancy qualification, this is long overdue and also start issuing standards in context to Sierra Leone business environment and practice but in harmony with International Federation of Accountants (IFAC). The Accounting profession has always been a corporate gate keeper and go hand in hand in observance and compliance with best practice in corporate governance.
In other to bring corporate governance to bear and to improve the country competitiveness, stricto senso, the government of Sierra Leone need to build a financial regulatory body and support and strengthen the Accounting profession.
It is not the number of corporate failures due to lack of governance structure but the implication that really matters. Failure of a commercial bank with a network of branches has a very devastating effect on the society.
A strong collaboration is needed between the private and public sector to co-create synergies and to fast track growth in other to achieve a middle income country by 2035. Best practice in corporate governance is the key in mitigating risk and attracts investment in a vibrant economy. Sierra Leone need a shift from its current reporting model. Embracing Integrated Reporting will add up to spur business growth and continuity
By Minkailu Mansaray
(Business Analyst, Consultant and Lecturer UK and The Gambia)
Fellow Association of Business Executive (FABE)
MBA Strategy and Leadership (Merit) Staffordshire
MBA Finance (Wales)
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