Governors Implore Promotion of Credible Corporate Governance Framework

One of the major vices facing the world are issues related to governance vulnerabilities.  Unless governance principles are enhanced and adhered to, these vulnerabilities easily crystallise into corrupt practices, and indeed this is the case in many countries today. This was repeatedly mentioned by Governors who attended the Forum for Central Bank Governors for the MEFMI region, which was held on 28 June 2019 in Basel Switzerland. The financial partner for the event was Investec Asset Management.

In his opening remarks of the Forum, the MEFMI Executive Director, Michael Atingi-Ego said MEFMI had chosen the theme of Governance for the 2019 Executive Fora events to highlight the downsides of its shortfalls. Specifically, a trust deficit in public institutions lowers policy implementation impact making it costly for the desired outcomes to be realised. Ensuring good governance in our institutions is therefore key in maintaining public belief, confidence and trust in them. It was against this background that the two presentations for the Event were chosen.

The Managing Director, of Investec Asset Management ex-South Africa, James Hatuikulipi reiterated the grave need for the MEFMI region to embrace the OECD Principles of Corporate Governance. He stated that the objectives support stronger growth and more inclusive societies. The principles also call for institutional investors and asset managers to disclose their policies with regards to corporate governance.

In his presentation at the Forum, Ceda Ogada pointed out that that the IMF had adopted a new framework to address governance weaknesses that often bred corruption. He stated that the International Monetary Fund (IMF) was actively engaging countries in order to address corruption in a holistic manner as this has undermined social norms, ethics and trust. His presentation focused on governance vulnerability related to central banks and financial sector through and Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT).

In her presentation, Ms. Therese Niklasson shared Investec perspectives on corporate governance.  She pointed out that among other issues, as an investor in emerging markets, Investec Asset Management was encouraged by how these markets are catching up to mitigating and managing environmental and social risks, as well as strengthening corporate governance systems. She highlighted the growing participation of long-term asset owners, such as pension funds and insurers and as such, Investec was actively involved in supporting investors’ efforts to develop strong policies around their capital allocation.

In their discussions, the Governors as policy makers and regulators, agreed that there was need for them to promote a holistic and credible corporate governance framework which is supported by effective supervision and enforcement mechanisms. They also stated that both monetary and fiscal policy makers in the MEFMI region should not lag behind in synchronising such a framework across borders to ensure adherence to internationally accepted principles that will improve confidence as well as good functioning of the region’s financial markets.

The Governors Forum was attended by 25 delegates that include Governors from nine of the 14 MEFMI member countries.