BY MTHANDAZO NYONI
ZIMBABWE’S central bank has agreed with the Institute of Directors Zimbabwe (IoDZ) to establish a sector specific code of corporate governance.
In a letter to IoDZ chairman Mike Eric Juru, RBZ governor John Mangudya said the code proposed by directors would enhance accountability in the financial services sector, the subject of market ridicule since several banks collapsed between 2004 and 2015, with flamboyant executives coming under fire for manipulating depositors’ funds.
At least half a dozen top bankers fled the country as multiple sector players slipped into bankruptcies during the period, creating corporate graveyards at a scale never experienced before.
“The bank takes note of the initiative by the Institute of Directors Zimbabwe to have in place a Zimbabwean code that feeds into the Africa Corporate Governance Network’s Corporate Governance Code for Africa,” Mangudya said.
“The bank welcomes this initiative and is ready to partner with IoDZ in the preparation of a financial services sector code on corporate governance for Zimbabwe.
“I consider that the proposed partnership in the development of a sector specific code aligns with our efforts to enforce sound corporate governance practices in the banking sector.”
The central bank chief said the sector was currently operating under guidelines of corporate governance guidelines issued in 2004, which were followed by an amendment of the Banking Act (Chapter 24:20) in 2015 to incorporate an enhanced framework.
The apex bank has also enforced corporate governance through the Microfinance Act, which was capacitated about two years ago.
“I advise that currently, the bank is working on putting in place corporate governance regulations for the banking sector to be issued under the Banking Act,” Mangudya said.
“I trust that going forward, the proposed partnership will enhance the corporate governance practices in the financial services sector.”
In his proposal to the central bank, Juru said the initiative was coming at an opportune moment when the RBZ was already working on having corporate governance regulations in place for the banking services sector.
“We believe that our proposed code will be a landmark for the sector and our nation,” he said.
“This will also enhance your position and buttress any potential resistance or negativity as it will lay the foundation and be your kingpin for an easy buy-in of your corporate governance regulations in a similar fashion the Public Entities Corporate Governance Act was created based on the national code of corporate governance and was accepted without any resistance.
“In the interest of time, as we hope to conclude the code within the next four months, we propose a formal working arrangement through a memorandum of understanding.
“Our envisaged role in the partnership will be to engage and coordinate the various stakeholders in the banking sector without compulsion on a willing basis, bring global best practices in corporate governance issues for implementation as guided by the International Finance Corporation training given to our trainers, hold stakeholder consultative forums and come up with a world-class homegrown code providing a solution to shortcomings and gaps.”
He said key stakeholders will include the Zimbabwe Stock Exchange, the regulator of listed banks, the Bankers’ Association of Zimbabwe, the Standards Association of Zimbabwe, which will bring international corporate governance standards and business member organisations.