A BRIEF OVERVIEW OF CORPORATE GOVERNANCE IN ZAMBIA A PRESENTATION TO THE BRITISH CHAMBER OF COMMERCE IN ZAMBIA BY PATRICK D. CHISANGA LEAD CONSULTANT DYNAMIC CONCEPTS LIMITED THURSDAY, 28TH SEPTEMBER, 2017. 1 1 1

PRESENTATION OUTLINE 2 2 1. DEFINING CORPORATE GOVERNANCE. 2. KEY OBJECTIVE OF CORPORATE GOVERNANCE. 3. PRINCIPLES OF GOOD CORPORATE GOVERNANCE 4. CORPORATE GOVERNANCE STAKEHOLDERS. CORPORATE GOVERNANCE SYSTEMS. CORPORATE GOVERNANCE INSTRUMENTS. 7. CORPORATE GOVERNANCE REFORM IN ZAMBIA. 8. CORPORATE GOVERNANCE IN ZAMBIA TODAY. 9. THE WAY FORWARD. 2 2 2

DEFINITION The internal means by which corporations are operated and controlled, which involve a set of relationships between an Organisation’s Management, its Board, its Shareholders, and other stakeholders.” - OECD, 1999 3 3

DEFINITION In a concise sense, Corporate Governance has been defined as the System by which companies and organisations are Governed, Controlled and Managed. CADBURY REPORT, 1992. 4 4 4

KEY OBJECTIVE The key objective in Corporate Governance is to ensure that the Organization is governed in a way that is consistent with the principles of good Corporate Governance. The following are some of the main principles. 5 5 5

PRINCIPLES OF GOOD CORPORATE GORVERNANCE Integrity Responsibility Accountability Transparency Effectiveness Efficiency Sustainability 8. Reliability 6 6

PRINCIPLES OF GOOD CORPORATE GOVERNANCE The relationship between the Shareholders, the Board, the Management, employees and other Stakeholders is at the centre of many of the problems that can arise in Corporate Governance. 7 7 7

CORPORATE GOVERNANCE STAKEHOLDERS The following are the key stakeholders in any organization: 1. The Shareholders 2. The Board of Directors 3. The Management 4. The Staff 5. External Stakeholders 8 8 8

OTHER STAKEHOLDERS OF ORGANISATIONS 1. Stakeholders are all those individuals or corporate entities who could affect or be affected by an Organisation’s activities. (Cook & Deacon 1999) 2. It is vitally important that Organisations identify their stakeholders and develop appropriate strategies to interact with each one of them. 9 9 9

CORPORATE GOVERNANCE SYSTEMS 1. Appointment of the Board of Directors 2. Composition of the Board 3. Appointment of the Chairman 4. Appointment of the CEO 5. Risk Management 6. Financial Oversight 7. Ethics 8. Checks and Balances 9. Declaration of Interest 10 10 10

CORPORATE GOVERNANCE INSTRUMENTS 1. Board Charter 2. Ethics Charter 3. Code of Corporate Governance 4. Strategic Plan 11 11 11

CORPORATE GOVERNANCE IN ZAMBIA PRIOR TO 2000 1. Largely non existent apart from in a few multinational organizations. 2. In the private sector and particularly SMEs and family held Companies sound Corporate Governance practices were virtually unheard off. 3. Appointments of Board Members, Chairperson and CEO’s of SOE’s was done from State House, and they were fired the same way. 4. All SOE Boards were chaired by either Permanent Secretaries or Cabinet Ministers.

CORPORATE GOVERNANCE IN ZAMBIA TODAY Since 2000, the principles and practice of Corporate Governance in the Zambian economy has gained significant ground. Corporate Governance structures are being established in many Companies and Organisations, both in the private Sector as well as the remaining SOEs. 13 13 13

CORPORATE GOVERNANCE IN ZAMBIA TODAY cont/d.. Formal Director Training has been instituted by the IOD. Several Corporate Governance Consulting firms have come to the fore. Board Charters and codes of Corporate Governance are being developed.

CORPORATE GOVERNANCE IN ZAMBIA TODAY Cont/d.. The Lusaka Stock Exchange has instituted a code of Corporate Governance for listed Companies. The IoD has developed a Code for SMEs The Financial Sector Development Programme has been initiated under the aegis of the Bank of Zambia.

CORPORATE GOVERNANCE IN ZAMBIA TODAY cont/d.. Boards of Directors are beginning to assume their rightful authority over their companies. GRZ is beginning to understand and appreciate its role as a shareholder. In short the Corporate Governance Landscape in Zambia has improved significantly.

THE WAY FORWARD Clearly much has been done, but more remains to be done. Continuous Director training and development is necessary. More training in Board Effectiveness. 17 17 17

THE WAY FORWARD cont/d…. More Corporate Governance exposure for Permanent Secretaries, MP’s and Ministers. The APRM will impact positively. Greater insight into King III will help us consolidate and build on the solid foundations laid. I THANK YOU 18 18 18