Held at the Kenya School of Monetary Studies, Nairobi, Kenya July 21-22, 2003

The Pan-African Consultative Forum on Corporate Governance authorised the steering committee to issue the following communique on its behalf.

1. The second Pan African Consultative Forum on Corporate Governance was held in Nairobi, Kenya, 21st – 22nd July 2003, with the theme “Corporate Governance for Economic Performance and Sustainable Development”.     The first Forum was in Johannesburg, South Africa, in July 2001, and the next is planned for West Africa in 2005.
   
   This second Forum surpassed the breadth of participation of the first, drawing 180 delegates from 41 countries from all parts of Africa and from all sectors - the private sector, government, academia, trade unions and NGOs. Global support for the event was demonstrated by representation from 11 multilateral and bilateral development partners, together with major international institutional investors. The event was organised by a steering committee representing all regions of the continent, with sponsorship from 15 African companies and development partners.
   
   The delegates were welcomed by Mr. Hannington Awori, chairman of the Kenyan Centre for Corporate Governance, and also chairman of the Standard and Chartered Bank of Kenya and of the Nation Media Group. The Forum was formally opened by the Honourable Dr. Mukhisa Kituyi, Minister of Trade and Industry of the Republic of Kenya, representing the Honourable Mwai Kibaki, President of the Republic of Kenya, and the closing address was delivered by Dr. Demba Ba, representing Mr. James D. Wolfensohn, President of the World Bank Group.
   
   This second Forum recorded major progress in corporate governance in Africa, and demonstrated that a successful transition had been made from diagnosis of the issues in the first Forum to significant actions at regional and national levels by the time of this second Forum. Over 20 countries, and regional agencies covering an additional 12 countries, have initiated corporate governance programmes (in some cases well before the first Forum) and of these, 14 countries have now fully established key elements of corporate governance such as a national code, a national task force, formal standards, professional institutes, and director training courses, compared to less than half this number of countries at the time of the first Forum in 2001.
   
   
2. The subjects covered at the Forum included all the key elements and the practice of good corporate governance: probity, accountability, transparency, responsibility, fairness to all stakeholders, and the structures and systems for implementation. The Forum recognised that the varying conditions in countries led to differing priorities and stages of practice of corporate governance. Presentations by investment fund managers emphasised that good corporate governance improves the operational and financial performance of companies and of capital markets, in particular by making companies safer for investors, which decreases the cost of capital and encourages investment. This is a vital factor for private sector development, which will in turn bring long term economic growth and create employment, and therefore contribute to the alleviation of poverty.
   
   Delegates additionally affirmed that good corporate governance is not only crucial for the financial success of companies, but is also a prerequisite for corporate responsibility and thus for overall sustainable development. Corporate governance is concerned not only with the conformance of company directors to essential standards of fiduciary responsibility in overseeing management, but also with company competitive performance and capacity for long term sustainability. Only those companies with good corporate governance are likely to be concerned about all aspects of sustainability – financial, environmental and social.
   
   Delegates also spoke of the inseparability of corporate governance, public governance and the economic policy environment, and the consequent need for policy review and effective enforcement of the legal framework. Good corporate governance is much harder to achieve in a climate of poor public and economic governance, and similarly good public and economic governance cannot be sustained without sound corporate governance, especially through fighting the supply side of corruption.
   
   Delegates emphasised that improving governance is applicable to all types and sizes of enterprises in Africa, such that the subject might be better termed ‘enterprise governance’, covering not just the relatively few large publicly listed companies, but also unlisted private companies and family firms, state-owned enterprises, small and medium-sized enterprises (SMEs), and local subsidiaries of multinational companies. A particular issue raised at the event is the governance requirements of community-based organisations, such as co-operatives and micro-enterprise groups in the informal sector, with presentations on how this could be achieved. The prevailing view was that fundamental principles of good corporate governance are universal to all these various types of enterprises, but the practical implementation will differ.
   
   
3. The main purposes of the second Forum were to:
   
   
• Review progress and achievements in implementing good corporate governance practices;
  
• Discuss the business community’s efforts, expectations, results and deterrents in complying with good corporate governance practices in the African context;
  
• Exchange experiences and foster cooperation among local organisations leading the reform effort, such as Institutes of Directors [IOD], regulatory bodies, stock exchanges, shareholder and stakeholder associations;
  
• Encourage a more efficient use of resources for technical assistance and capacity building;
  
• Discuss the key regional corporate governance issues and identify priorities for reform.
  
  
4. The main conclusions and recommendations from the Forum were:
   
   
• The need to promote corporate governance through the banking system, development finance institutions and private equity investment, as well as through the equity markets; a number of countries have already initiated reform programmes through their central banks and bankers associations, and other countries are about to commence;
  
• To ensure that those countries which have not yet set up national task forces are encouraged and facilitated to do so through cooperation with other African countries which have successfully implemented similar initiatives, as soon as feasible;
  
• Several countries had already commenced training courses for directors of state-owned enterprises, recognising their economic significance and the need for specialised induction for their directors; this Forum has enabled these countries to share their experience with others which have resolved to commence similar programmes;
  
• The dissemination of information, and methods used to launch corporate governance initiatives to all concerned, were highlighted as critical functions for the Forum, through its dedicated website www.corporategoveranceafrica.org;
  
• The vital role that can be played by investor associations, and the need to form such associations in all countries with stock exchanges, and in all countries to create awareness of the rights of stakeholders;
  
• The need to mobilise domestic savings for investment in national companies, and so give greater confidence to international investment funds seeking opportunities in African markets;
  
• The essential need to forge trust among all the key players in the economic system, with particular emphasis on ethical conduct of directors, executives and employees, all of whom have a part to play in the efficient conduct of enterprises.
  
• To ensure that the needs and views of Africa are expressed in the forthcoming global policy dialogue to review the OECD Principles of Corporate Governance; representatives of this Forum will participate in a special consultative meeting to be organised by the Global Corporate Governance Forum in November 2003;
  
• To work in collaboration with NEPAD (The New Partnership for Africa’s Development) to promote good corporate governance in parallel with reforms for improved public and economic governance, so as to achieve the long term objectives of creating wealth for Africa through improving the operations of economic enterprises and attracting capital for investment, thereby generating growth and employment in a responsible and sustainable manner.
  
  

Issued by the Steering Committee, 23rd July, 2003.
All enquiries should be directed to:

Members of the Steering Committee are: African Capital Markets Forum; African Capacity-Building Foundation; Center for International Private Enterprise; Commonwealth Association for Corporate Governance; Commonwealth Secretariat; Forum Francophone des Affaires; Global Corporate Governance Forum; Organisation for Economic Cooperation and Development; Centre for Corporate Governance; U.N. Economic Commission for Africa; West African Bankers Association; The World Bank Group and International Finance Corporation.