Corporate Governance In Tanzania 2009 Semboja Haji Hatibu

Outline of Presentation Corporate Accountability in Tanzania Beyond the Voluntary Approach Stakeholders hold corporate accountability Problems, constrains and limitations of corporate entities General and Specific Policy Strategies

Corporate Accountability in Tanzania (1) Many large-scale firms in Tanzania have explicit codes in place. Many micro, small and medium scale firms in Tanzania do not have explicit code of business conduct and ethics. Some have simple codes developed by owners and management to guide behavior of their employees and ensure smooth and effective operations. Consultations with few CEO’s in the SME sector suggest that codes are new phenomena. These codes are part and parcel of staff regulations and contract between firms and staff and in many cases these are not outcome of consultations with staff.

Beyond the Voluntary Approach in Tanzania (1) Markets and ethics do not easily mix. Large scale firms are here to make super profits and not to solve our domestic (poverty) problems. The logic of markets is to reward the most competitive company, not the most ethical one. Voluntary codes of conduct and certification standards are thus excellent points of departure for more comprehensive solutions. Policies, laws and regulations in place, but institutional framework is weak

Beyond the Voluntary Approach In Tanzania (2) The success of the voluntary approach to corporate accountability in Tanzania has been premised on two beliefs. The first is the belief that business must respond to new social political agendas and demands. The second is that social and environmental performance makes good business sense The situation in Tanzania is different Weak high correlation between good environmental management and super profits & higher stock prices. Modern large scale private firms have not been able to translate financial returns into improvements in occupational health and safety, worker satisfaction and environmental management.

Stakeholders hold corporate accountability NSA make corporations more accountable for environmental and human rights issues (LEAT) Some activists target individual corporations or specific industries, while other campaigns work to change the regulatory structure under which corporations operate Increasing awareness and building a constituency of people to advocate for a particular cause is integral to each strategy. Codes of Conduct not in use

Problems, constrains and limitations of corporate entities (1) The following are some of factors affecting use of codes in Tanzania; Size and level of technological development, Limited institutional relation and networking, Lack of effective management information and communication systems, Lack of knowledge and information on the need for codes, No effective national laws and regulations ensuring that firms have codes in place, Private sector associations and business supporting institutions are less concerned on the use of codes and its impact on corporate governance.

Problems and limitations of corporate accountability It is very difficulty to establish and monitor corporate accountability. Companies in Tanzania have not been subjected to a proper system of accountability. The root causes are various but include the following specific factors: First, the conventional attitude among most corporations that their primary, indeed sole duty, is to further the interests of their shareholders. Secondly, the failure of institutional framework to control the conduct of corporations sufficiently. Like other developing countries, Tanzania lacks the institutional framework necessary to check corporate power. Thirdly, deficiencies in the legal mechanisms for holding corporations to account. Fourthly, the absence of practical access to justice for those on the receiving end of corporate wrongdoing

General and Specific Policy Strategies (1) Promote an enabling environment and effective regulatory framework for economic activities Review the legal framework governing the establishment of the corporate governance principles, systems and institutions Modernize the legal and regulatory framework so as to speedy dispensation and accessibility to justice, and comprehensive legal system Enhance harmonized statutory administrative tribunals and their practices; Promote adoption of codes of good business ethics in achieving the objectives of the corporation; Ensure consistent and adequate constitutional safeguards against violation of basic human rights

General and Specific Policy Strategies (2) Enhance efficient regulatory institutions for corporate governance, with accessible services and effective supervisions. Build modern corporate governance administrative network systems, structures and in specific expand administrative capacity of the judiciary. Establish performance management systems in all corporate governance institutions. Establish a strong policy management coordination, monitoring and evaluation systems in the corporate entities. Enhance a well designed inter-agency and close collaboration among implementation regulatory agencies. Strengthen education and training institutions poised to deliver quality legal training by establishing a full time legal education secretariat independent from the judiciary; Enhancing accessibility, transparency and accountability systems in the corporate governance entities and institutions

The End Thank You