Restore confidence in public entities

28 Jun, 2020 - 00:06 0 Views

The Sunday Mail

Vision 2030
Allen Choruma

REGULATORY bodies in Zimbabwe play a pivotal role in promoting and strengthening good corporate governance across all sectors of the economy.

Good corporate governance is a prerequisite for improved economic efficiency, growth and stability as well as encouraging investment in the economy in line with the goals of Vision 2030.

It is the role of regulatory bodies, as agents of the Government, to put in place regulations and laws to govern the conduct of both public and private organisations in order to maintain a stable economy.

It is an established rule that economies that operate without adequate regulation and oversight create bouts of turbulence and instability to national economies.

Corporate scandals, many of which are attributed to lapses in good corporate governance, scare away both domestic and foreign investors. This adversely affects economic stability and growth as envisioned under Vision 2030.

Financial systems and capital markets, for example, require strict and rigorous regulation by the Reserve Bank of Zimbabwe (RBZ), Securities and Exchange Commission of Zimbabwe (SECZ), and Insurance and Pensions Commission (IPEC).

This enables them to promote market integrity, provide high levels of investor confidence, reduce systemic risks, and ensure transparency and accountability.

It has been proven that the best governed companies perform better and also attract investment (capital inflows). This drives the growth of these companies and in turn the national economy in line with goals set under Vision 2030.

The Constitution of Zimbabwe, as the supreme law of the land, recognises the importance of good corporate governance. Chapter 9 focuses on “good governance” and provides that the state is required to “adopt and implement policies and legislation to develop efficiency, competence, accountability, transparency, personal integrity and financial probity in all institutions and agencies of Government at every level”.

Lead by example

Good corporate governance requires Government to create an enabling environment and appropriate regulatory framework conducive to the conduct of business and stimulation of economic activity.

Our Government has taken commendable strides to put in place an appropriate legal and institutional framework that promotes good corporate governance in public entities, state enterprises and parastatals.

It is well known that economies that operate without adequate Government regulation and oversight in the public sector are prone to bouts of instability that could potentially lead to collapse of national economies.

Public Entities Corporate Governance Act

The Public Entities Corporate Governance Act (Chapter 10:31) is a milestone in fostering good corporate governance in parastatals, State-owned enterprises, public entities, certain Constitutional commissions and other commercial entities controlled by Government.

This Act, together with the Zimbabwe National Code on Corporate Governance (Zim Code), should be used to enhance corporate governance in public entities, foster good governance and curb corruption.

If this Act and the Zim Code are applied in spirit and intent, most of the corporate governance malfunctions that are repeatedly highlighted in the Auditor General’s reports would be addressed overnight.

Government needs to urgently restore confidence in public entities through increased supervision and ensuring compliance to the provisions of the Act. Strengthening of governance structures of public entities is also critical to ensure transparency and accountability, stopping malpractices and abuse of public resources and taking appropriate disciplinary action, including prosecution of offenders to deter corruption.

Regulatory bodies in Zimbabwe have taken a cue from Government and put in place corporate governance instruments to promote good corporate governance in entities they regulate.


The RBZ has been at the forefront of putting in place a robust and stringent corporate governance framework for banks and other financial institutions it regulates.

Since 2004, the RBZ has issued a plethora of guidelines on corporate governance, risk management, audit and anti-money laundering, board and director evaluation framework, and minimum disclosure requirements.


IPEC has put in place corporate governance instruments applicable to insurance companies and other entities it regulates. IPEC’s “Directive on Governance and Risk Management for Insurance Companies” was issued in 2016.

The directive was issued in terms of the Insurance Act (Chapter 24:07).

The objective of the directive is to outline the minimum IPEC expectations and requirements for shareholders, board and management control functions of an insurer to ensure effective governance and a risk management framework is in place.


SECZ, established through the enactment of the Securities Act (Chapter 24:25), has also put in place corporate governance instruments that govern capital and stock markets, trading in securities and so on.

The Zimbabwe Stock Exchange (ZSE), which operates under SECZ, has Listing Rules which govern how publicly listed companies (issuers) operate.

The ZSE Listing Rules mainly focus on issuer regulation, the listing and trading in securities.

They have been criticised for not having specific provisions that deal with corporate governance in listed companies.

Sports and Recreation Commission (SRC)

In September 2012, the SRC issued the “Zimbabwe Sports and Recreation Commission Corporate Governance Charter” applicable to National Sport Associations it regulates.

The Charter outlines minimum corporate governance structures for National Sport Associations, including the structure and terms of reference for their boards.


The above sector analysis shows that most regulatory bodies in Zimbabwe have put in place decent measures and instruments to promote good corporate governance in organisations or institutions they regulate.

Notwithstanding, mainstream media has been awash with cases of corruption, breach of laws and a plethora of corporate scandals. What is causing this?

What is lacking in Zimbabwe is not laws, codes, guidelines, directives and policies meant to enhance good corporate governance in our institutions, but the will, ability and capability to enforce compliance.

Perhaps what has been lacking is capacity, in terms of skilled human capital
and resources, by regulators to enable them to supervise regulated entities and ensure compliance to corporate governance protocols.

Most organisations, if we adopt a “tick box” corporate governance audit, have all the governance structures in place, that is to say the board and committees, board charters and codes of ethics, risk management and audit guidelines.

Yet, despite the existence of all these corporate governance structures and frameworks, corporate governance standards continue to fall.

The challenge for Zimbabwe’s regulatory bodies is, therefore, to ensure rigorous supervision, compliance and application of appropriate sanctions for breach of law and relevant corporate governance protocols.

Where criminal offences take place, there should be prosecution of offenders and application of sanctions to deter would-be offenders.

Where high profile corruption cases are successfully prosecuted, it gives public and investor confidence that our systems of corporate governance in Zimbabwe are working and aligned to the attainment of Vision 2030.


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