Corporate Governance in Africa

Assessing Implementation and Ethical Perspectives

Kerry E. Howell, M. Karim Sorour, Kerry E. Howell, M. Karim Sorour

• Éditeur: Palgrave Macmillan
• Année: 2016
• ISBN:
  9781137567000
• Sujet: Commerce
• Sous-sujet: Gouvernance d'entreprise

Using a range of case-studies, this book analyzes corporate governance relationships between several African countries and the international community, providing an ethical assessment of issues surrounding globalization and adherence to external governance mechanisms. Employing a methodological approach, Corporate Governance in Africa critiques occidental perspectives of corporate governance in relation to the needs of separate states, and the contradictions that arise when local cultures are not taken in to consideration. With case studies from Egypt, Ghana, Nigeria, South Africa, Kenya and The Gambia the book presents a comprehensive view of North, East, West and South Africa with contributions from global experts in the field. The authors critique the transformations deemed necessary for governance procedures in order to facilitate confidence and inward investment for these African states.

© The Author(s) 2016

Kerry E. Howell and M. Karim Sorour (eds.)Corporate Governance in Africa10.1057/978-1-137-56700-0_1

Begin Abstract

1. Introduction: Notions of Governance, Social Contracts and Ethical Perspectives

Kerry E. Howell¹

(1)

Graduate School of Management, Plymouth University, Plymouth, UK

End Abstract

Introduction

This text provides an original opportunity to identify and assess implementation and ethical issues relating to corporate governance in Africa. Through specific case studies regarding corporate governance in individual African states and relationships with generic determinants, advice and direction from the international community, this text provides an ethical assessment of issues regarding globalization as an imposition and the necessity of developing countries to adhere to external governance mechanisms. In addition, through the case studies the text will illustrate what may be considered necessary transformations within specific states if governance procedures are to be transparent and ethical so as to facilitate trust, confidence and inward investment. There is recognition that corporate governance contributes to sustainable economic success as well as enhanced credibility and corporate responsibility (Armstrong 2003); each a necessary variable when attracting funding from both regional and foreign investors. ‘Good’ corporate governance practices are also perceived as means of deterring unethical and corrupt practices which may undermine African capability and credibility in the international domain. ‘Good’ corporate governance may also ensure market discipline and transparency (Armstrong 2003). Indeed, ‘standardization of corporate governance … across many different countries may … seem like a sound approach’ (Letza 2015, p. 191). However, because of cultural and historical differences such an approach has largely been resisted. That said, it is not unusual for developing and ‘transition economies to adopt with little modification the established codes and regulations of developed countries’ (ibid). Indeed, local cultures and traditions exist in individual countries and this text identifies relationships between universal and relativist perspectives of corporate governance in Africa. In addition, rationales for acting through self-interest (egoism) and/or the common interest (altruism) underpin the ways agents behave when dealing with moral dilemmas and regulation.

In this study a number of different countries are assessed and analysed through specific paradigms of inquiry and methodological approaches. Critical theory and constructivism provide paradigms of inquiry, leading to research programmes that challenge universal perspectives of corporate governance in relation to the needs of separate states and the contradictions that arise when local cultures are not taken into consideration. Phenomenological and qualitative research enables understanding of specific environments and situations through identifying human activity and agency. Indeed such research allows transferability of findings through the amalgamation of similarities and difference in relation to each of the African states analysed. All of the countries identified in the study have been influenced by colonization which has impacted on cultural attitudes and evolving business environments. Fligstein and Choo (2005) argued that corporate governance involved a reflection of political and socio-economic upheavals and struggles in a given environment rather than efficiency and agency relations between stakeholders and boards.

Africa consists of 53 countries and can roughly be divided into three areas which include the ‘Arab-speaking countries in North Africa (the Maghreb zone), the French-speaking countries of central and western Africa (the Franc or Francophone zone), and the English-speaking countries of southern, eastern, and western Africa (the commonwealth states or Anglophone zone)’ (Roussouw 2005, p. 95). Roussouw (2005) provides an overview of African reports regarding corporate governance and a number of PhDs have dealt with specific African states (Sorour 2011; Boadu 2013; Ibrahim 2013; Faye 2014) as well as ethics and corporate governance (Howell and Letza 2000; Nwanji 2006). Chapter 2 concentrates on the paradigm of inquiries (constructivism and critical theory) that underpin the methodologies utilized by the case studies identified in this text. Chapter 3 deals with the notion of corporate governance in a universal context and identifies how ethical perspectives and theoretical frameworks inform practice.

The rest of this chapter discusses the notion of governance and how this is developed through contractual arrangements between individuals and states. Through a discussion of the social contract the necessary underpinnings of ethical perspectives for different governance procedures can be identified. To give a full comprehension of corporate governance this text provides a discussion of governance in general and illustrates how corporate governance as a framework of rules and regulations incorporates a social construction. The text also outlines the relationships between levels of governance relating to global, regional and national activities as well as how corporate governance is embedded in the difficulties and dichotomies that arise between these dimensions. This assessment provides the basis for our understanding of ethics and individual behaviour in both universal and relativist contexts. Notions of ‘good’ governance based on different ethical perspectives are also identified and explored. Aristotle contended that the ‘good’ state and the ‘good’ individual could be created through education and rational thought. Ultimate good involved the individual and the state pursuing virtue through the golden mean. Political science should ensure that the right things are taught in the state to allow the individual the opportunity to distinguish the golden mean and become a rational thinking entity, i.e. to find the self (Aristotle 2001). Plato (1997) identified education, understanding and thought as the only means of attaining the ‘good’ state. Power remains exclusively in the hands of those that are properly capable of wielding it; these were the philosopher kings who would rule by superior virtue and rationale. ‘Good’ can be considered ‘as being such as to satisfy the requirements or interests of the wants of the kind in question’ (Brown 1986, p. 132). However, this indicates that no substantive or objective universal moral position exists when identifying what can be termed good. For some notion of ‘good’ governance to exist some form of external standards are required; consequently, some structure with identified rules and regulations is necessary (ibid). Bourdieu argued that ‘if one admits that the subject emerges in the tension between the individual and the universality, then it is obvious that the individual needs a mediation, and thereby an authority, in order to progress on this path’ (cited in Zizek 2014, p. 183). Some form of authority is required to provide notions of good governance and the rules and regulations premised on these conceptualisations and interpretations.

Developing Notions of Governance: Social Contracts

Governance is a nebulous term and may be used to identify and describe patterns of rules and regulations that emerge when a nation-state depends on other institutions to provide control, direction and consistency. At the international and European or transnational level global and regional governance refers to the patterns of rules and regulations that provide guidance and assistance for nation-states. In addition, ‘corporate governance refers to patterns of rules within businesses—that is, to the systems, institutions and norms by which corporations are directed and controlled’ (Bevir 2009, p. 3). In a general context governance involves the development of social structures and co-ordination of these structures through contract, consensus and obligation. Governance involves individual behaviour in terms of levels of participation in developing and administrating procedures. ‘Governance … means creating an effective political framework conducive to private economic action—stable regimes, the rule of law, efficient state administration adapted to the roles that governments can actually perform, and a strong civil society independent of the state’ (Hirst 2006, p. 14). Political frameworks have historically relied on nation-states implementing top-down procedures with limited reference to international, regional, local and/or community based governance. However, in the modern world, governance is required at the international level or beyond national boundaries, e.g. regulation of world trade, financial markets and accounting procedures. Linked closely to these areas is the concept of corporate governance which is ‘a watchword (for) those who wish to improve the accountability and transparency of the actions of management’ (ibid, p. 17). Multiple levels and ideas of governance reflect a shift beyond the notion of sovereign nation-states as the main disseminators of rules and regulations. Through notions of the social contract or civil constitution the development of political communities became structures that defined decisions and political affairs and through these political communities the notion of governance expanded to numerous levels and domains. In general, the idea of the social contract has been used to ‘explain and defend the state’ as an immutable sovereign institution and expected residual of political power (Hampton 1998, p. 380). However, constructivist perspectives also identify the social contract as underpinning notions of governance but argue that ‘authoritative political societies are human creations’ (Hampton 1998, p. 382). Governance is linked with leadership and ethics as it identifies the relationship between the individual and the community (the governance of society is shaped by contractual arrangements at multiple levels).

There is a clear relationship between governance, morality and the social contract as well as ethical perspectives relating to human existence and social development. ‘Philosophers such as … Hobbes, Locke, Rousseau and Kant have argued that human beings would find life in a state of nature … so difficult that they would agree (either with one another or prospective ruler) to the creation of political institutions that they believe would improve their lot’ (Hampton 1998, p. 380). This would necessitate a contractual agreement that required individuals to ‘join others in acting in ways that each, together with others, can reasonably and freely subscribe to as a moral common standard’ (Diggs 1982, p. 104).

In a state of nature social restraints are removed and all are continually open to a violation of person and possessions. As Hobbes famously indicated, in a state of nature human existence would be ‘solitary, poore, nasty, brutish and short’ (Hobbes 1651/1990, p. 62). However, it may be correct ‘that a society of perfectly consistent prudent egoists would invent institutions for mutual insurance’ but this does not mean that morality arises from ‘calculated self-interest’ alone (Midgley 1993b, p. 4). Other human qualities exist which arise directly in relation to the claims of others and people act through altruistic notions such as a sense of ‘justice’, ‘friendship’, ‘compassion’ and ‘generosity’. Such qualities exist and are respected and ‘honoured in most human societies’ (ibid., p. 5). Egoists can be seen as individuals who put their self-interest before and above others in all contexts. One behaves egoistically if the pursuit of one’s own good conflicts with others in situations where the failure to restrain such pursuits is morally reprehensible and the ‘proportion of behaviour that is egoistic exceeds a given measure, typically the average’ (Baier 1993, p. 197). However, one may argue that egoism and the pursuit of self-interest is a means of developing the common good and ‘if each pursues her own interest as she conceives of it, then the interest of everyone is promoted’ (Baier 1993, p. 200). For example, in a state of nature humans necessarily distrust one another. My thoughts or instincts tell me that others are deceitful and will be a threat; others think the same and consequently perceive me as a threat. In this way, humans act egoistically through the rational anticipation of danger, which renders each individual a potential threat. The formation of the common good through the pursuit of unfettered self-interest will only occur if there is no conflict between competing interests or some form of arbiter or sovereign emerges. As interests will always conflict some form of coordination of activities that minimises individuals interfering with one another is required. Consequently, there is a level of egoism in the development of the social contract which ultimately works in the common interest.

Hobbes (1651/1990, Chaps. 14 and 15) outlines his directives for the realisation of a social contract:

• Bring about peace and co-operation whenever this is possible.
• Each individual should lay down the right of self-protection and transfer rights of protection to a third party (a ruling entity).
• Both individuals and the third party should keep covenants, promises and honour agreements.

Because peace and cooperation benefit everyone, individual and social survival would be enhanced if this state of affairs were achieved. How...