Invest Sierra Leone 2016 Special Seizing the corporate governance opportunity is essential if Sierra Leone is to secure investor conf idence By Chinyere Almona, Regional Program Manager, Africa Corporate Governance Program In its Agenda for Prosperity (2013-18), Sierra Leone laid out the ambitious goals of becoming an inclusive, green, middle income country by 2035, with specif ic targets of only 5% unemployment, and lifting 80% of its citizens above the poverty line. Governance and public sector reform is one of the eight agenda pillars intended to help the country achieve its goals. As one of the seven key areas, Governance is also a critical component of the President’s Recovery Priorities. Clearly, Sierra Leone’s government and its private sector recognise the importance of corporate governance, especially as a driver of overall economic health and growth. But what practical steps are being taken to improve standards on the ground? To be clear about what’s involved, corporate governance is defined as the structures and processes by which companies are directed and controlled. Good corporate governance helps companies operate more efficiently, improve access to capital, mitigate risk and safeguard against mismanagement. It makes companies more accountable and transparent to investors and gives them the tools to respond to stakeholder concerns. Corporate governance also contributes to development by helping facilitate new investment, access to capital, and long-term sustainability for firms, leading to economic growth and increased employment opportunities across markets. With support from the International Finance Corporation (IFC), a member of the World Bank Group, Sierra Leone is strengthening its financial sector, making it safer, sounder, and better positioned to attract the foreign investment it needs to grow. The IFC and Sierra Leone’s government are collaborating on providing training on governance related issues for the board directors and senior executives of the country’s leading banks and institutions. The training programme is targeting at least 100 organisations in Sierra Leone. It explains the roles of directors and committees, and introduces global best practices of corporate governance, including how to meet the expectations of markets and investors. IFC is also working directly with Sierra Leone’s Central Bank and its Corporate Affairs Commission to make information on corporate governance more widely available to those in the banking sector and beyond, and to develop a code of conduct for private sector businesses across Sierra Leone. These efforts are helping Sierra Leone’s private sector better understand the importance of corporate governance, and how to incorporate its guiding principles into its structures.
In the aftermath of the 2008 global financial crisis, the pitfalls of failing to promote sound corporate governance became shockingly clear. Increasingly, companies must be able to respond to fast-changing conditions, and to meet the needs of investors and partners in a timely and transparent manner. Businesses and banks in Sierra Leone are no exception. The country cannot fully develop by counting entirely on its natural resources, stunning scenery, and young and growing population of entrepreneurs, as valuable as these assets are. Good corporate governance – good governance in general – is an essential ingredient that every bank or business needs in order to secure trust, conf idence, and investment from its partners. Conversely, a weak corporate governance framework will severely impede all stages of the investment process and hence the economy’s overall prospects to build a strong private sector basis for economic growth. Poor corporate governance will damage the capacity to mobilise savings, it will hinder eff icient allocation of f inancial resources, and it will prevent proper monitoring of corporate assets. Perhaps most importantly, corporate governance is about delivering long-term sustainability. One of the most salient relationships in economic life is the positive link between investment and economic growth. In this regard, any economic strategy that looks 20, 10, or even five years into the future must consider the fundamental role that corporate governance will play in creating an enabling environment for that relationship to flourish. FT Insight 19 For IFC, which is the largest global development institution focused exclusively on the private sector in developing countries, corporate governance is part of broader strategy to support growth in Sierra Leone. IFC also invests directly in Sierra Leone, and has supported business reform efforts, gender initiatives, and a wide ranging World Bank Group response to the Ebola crisis. Going forward, IFC will remain a strong partner with Sierra Leone, helping the country realise its ‘Agenda for Prosperity’. We’re confident that the public and private sector institutions will adapt good corporate governance practices that have the potential to make them highly attractive to investors and make Sierra Leone the next investment destination in Africa. www.ftinsight.net