With countless issues around financial controls and mismanagement of funds across Africa, it has become a pandemic of unethical behavior that is crushing the aspirations of Africans to see the continent thrive and grow.
Ethical governance has been proven to be a cornerstone of growth potential, ensuring that the taxes and revenues accrued to governments are employed in the best possible means to achieve a growing economy, create job opportunities and attract foreign investments that will create exponential growth.
A comprehensive study estimating the impact of governance on economic growth in a sample of 116 countries worldwide imply that the influence of governance on economic growth is statistically significant. Furthermore, each country’s rise in economic growth favourably and substantially influences the economic growth of its bordering nations.
Andrew Harding, of the Association of International Certified Professional Accountants, who believes that finance and accounting professionals can shape policies, drive best practices, and foster trust in Africa’s public and private sectors, shared his thoughts on the subject with Business Tech Africa.
By Andrew Harding FCMA, CGMA, Chief Executive – Management Accounting at AICPA & CIMA, together as the Association of International Certified Professional Accountants
Governance is crucial to economic development across Africa. With enhanced accountability and transparency, the continent can achieve substantial improvements in both the public and private sectors.
At the heart of this is the role and advocacy of the finance and accounting profession in shaping policies that not only drive economic success, but also drive best practices and foster trust in Africa’s institutions.
Good Governance: Building a Culture of Trust and Transparency
Professor Mervyn King has been an influential figure for modern day corporate governance in Africa and abroad, the King Report helped establish best practices in Africa and influenced the policies of other governments and regulators around the world. Integrated Reporting has origins in South Africa, but it is now widely adopted across the globe.
Strong governance places a focus on robust decision-making with appropriate checks and balances and encourages fiscal transparency. In contrast, poor governance offers incentives and opportunities for corruption, which undermines trust. Poor governance threatens market integrity, competition, and long-term economic development.
I believe that for Africa to take advantage of the opportunities and attract foreign investment, governments, and business leaders must place heavy emphasis on instilling good governance practices into both the corporate boardrooms and the public sector.
It is this focus on governance that promotes integrated thinking, forcing us to consider how strategic execution is enabled by an organisation’s structure, functions and decision-making processes, and its risk and opportunity management processes. It forces the finance and accounting profession and institutions to focus on accountability, transparency, and value, rather than just numbers and profitability.
Collaborating with policymakers to improve business environments
Transparency and accountability are foundational to good governance, but more importantly, they are also the DNA of corporate reporting, and this is where the finance and accounting professionals are integral.
They play a pivotal role in the sourcing, analysis, communication, and use of decision-relevant financial and non-financial information to preserve value for their organisation and build trust.
Moreover, Africa’s influence on the global stage is growing. As finance and accounting professionals, it is our job to share our organisations’ stories with markets, investors, and society, and to foster better collaboration between big business and policymakers to enhance business environments and unlock capital flows.
So, the key question is: how do we ensure more effective collaboration between finance, business and policy makers? The solution lies in how we advocate for accountability and transparency through:
#1: Proactive engagement: Business can work in partnership with government to help shape and better inform policies and priorities. This is a relationship that needs to work on trust and government needs to be willing to engage and listen. Governments need access to business insights and data, and there is a hunger for information and feedback.
#2: Influence reforms: The finance and accounting profession can advocate for the policies that support economic growth across Africa, that help address some of the challenges facing governments relating to education and development such as skills gaps, productivity, and tax.
#3: Adopt and reflect best practice: Business must set the tone. To be advocates for strong governance, we need to adopt best practices across Africa. Finance and accounting professionals, including business leaders, have the potential to be important advocates for reform.
“I firmly believe there are significant opportunities for the profession, businesses, and government to collaborate and ensure accountability in Africa”, says Harding.
“Ultimately, this collaboration can pave the way for economic growth and investment, and as a profession, we have valuable lessons to share with our governments through our advocacy and outreach programs, he concludes”.
