Financial sector urged to strengthen governance

Financial sector regulators in Africa have been urged to ensure corporate governance to deter white collar crimes, and strengthen service delivery and sustained stability. John Rwangombwa, the governor of the central bank, also said financial institutions should put in place strong and effective strategies, noting that weak corporate governance systems have often led to collapse of banks, especially on the African continent. Rwangombwa was speaking during the third Afreximbank Customer Due Diligence and Corporate Governance forum in Kigali last week. The National Bank of Rwanda (BNR) chief also emphasised the need for continuous assessment and provision of accurate information to facilitate corrective and timely action to stem unethical practices. According to Rwangombwa, banks can promote corporate governance by harnessing the relationship between management, shareholders and other stakeholders. He added that the structures through which a firm’s objectives are set, and the means of attaining those goals, and constant performance monitoring play a critical role in strengthening governance. “It is, therefore, important to ensure timely and accurate disclosure on all matters, including your financial health, performance, ownership and governance,” he said. He argued that financial institutions are unique and should uphold public trust to succeed. Rwangombwa noted that the concept of corporate governance is relatively new, adding that even some directors do not understand the ‘heavy’ responsibilities of a director. Most experts argue that the inability to plan and respond to changing business circumstances is limiting financial institutions’ capacity to contribute to the continent’s economic growth and sustainability. Illicit financial flows, trade–based malpractices, corruption, tax evasion, commercial and other corporate vices have had detrimental effect on development in the African continent, according to Dr Emmanouil Ioannidis, a senior director for financial crime compliance and legal at FIN1 Compliance, a the UK-based firm. “However, the situation can be avoided through sustainable and strong corporate governance strategies and customer due diligence practices, especially when sector players embrace technology and strong collaboration networks,” he noted. Philbert Afrika, the managing director at University of Kigali’s Centre for Economic Governance and Leadership, challenged companies to ensure that codes of corporate governance are fully integrated within their financial and business process management strategies and goals to sustainability. He said firms must devise ways to integrate business management strategies and performance management, measurement and reporting practices to strengthen accountability and governance. In his earlier interview with The New Times, Eric Tenie Ouattara, the managing director of Malawi’s FDH Financial Bank, said strengthening corporate governance and surveillance are essential to enhance Africa’s attractiveness as an investment destination. According to statistics, though global financial crimes slowed to 36 per cent this year, from 37 per cent in 2014, distribution across regions has been uneven over the years. Data shows that economic crimes increased from 35 per cent to 40 per cent in Western Europe between 2014 and 2016; were up from 21 per cent to 25 per cent in the Middle East; and they rose from 50 per cent to 57 per cent in Africa. editorial@newtimes.co.rw

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Financial sector urged to strengthen governance