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Corporate Governance
The African Peer Review Mechanism (APRM) takes cognizance of the fact that good economic and corporate governance including transparency in financial management are essential prerequisites for promoting economic growth and reducing poverty.
The APRM definition of Corporate Governance involves all aspects that govern a company’s relations with shareholders and other stakeholders. The APRM’s Objectives, Standards, Criteria and Indicators document defines Corporate Governance as concerned with the ethical principles, values and practices that facilitate holding the balance between economic and social goals and between individual and communal goals. The aim is to align as much as possible the interests of individuals, corporations and society within a framework of sound governance and common good (Paragraph 4.1 Objectives, Standards, Criteria and Indicators document (NEPAD/HSGIC-03-2003/APRM/Guidelines/OSCI 9 March 2003).
Codes and Standards
The Heads of State and Government of the African Union (AU) approved eight codes and standards for corporate governance assessments
- Principles of Corporate Governance (OECD and Commonwealth)
- International standards on accounting reporting
- International standards on auditing
- Core principles of Effective Banking Supervision
- Core principles for Securities and Insurance Supervision and Regulations
- African Charter on Human and Peoples’ Rights
- Labour Codes of the International Labour Organization (ILO)
- Codes on industrial and environmental safety and hygiene of the World Health Organization
The approved codes and standards have the potential to: promote market efficiency, control wasteful spending, consolidate democracy and encourage private financial flows-all of which are critical in the quest to alleviate poverty and promote sustainable development. AU members are encouraged to strive within their capacity capabilities to implement these codes which have been developed through consultative processes that involve active participation and endorsement by African countries.
Corporate Governance Objectives
APRM Corporate Governance Assessments are undertaken along five main objectives:
- Providing an enabling environment and effective regulatory framework for economic activities.
- Ensuring that corporations act as good corporate citizens with regard to human rights, social responsibility and environmental sustainability
- Promoting the adoption of codes of good business ethics in achieving the objectives of the organisation.
- Ensuring that corporations treat all their stakeholders (shareholders, employees, communities, suppliers and customers) in a fair and just manner.
- Providing for accountability of corporations and directors.