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    Emmanuel Tumusiime-Mutebile: Promoting and Strengthening Good Corporate Governance in Uganda

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    Mohammad Nouredeen
    The governor of the Bank of Uganda commended the Institute of Corporate Governance of Uganda for promoting good governance, which is crucial for Uganda's economic development. Recent corporate scandals showed the importance of strong oversight and internal controls to prevent malfeasance. In Uganda, weak governance is exacerbated by the often haphazard appointment of directors not always based on merit. Directors must understand their strategic oversight role and not micromanage. Good corporate governance with accountability and transparency is needed to maintain public confidence.

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    Emmanuel Tumusiime-Mutebile: Promoting and Strengthening Good Corporate Governance in Uganda

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    Mohammad Nouredeen
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    The governor of the Bank of Uganda commended the Institute of Corporate Governance of Uganda for promoting good governance, which is crucial for Uganda's economic development. Recent corporate scandals showed the importance of strong oversight and internal controls to prevent malfeasance. In Uganda, weak governance is exacerbated by the often haphazard appointment of directors not always based on merit. Directors must understand their strategic oversight role and not micromanage. Good corporate governance with accountability and transparency is needed to maintain public confidence.

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    The governor of the Bank of Uganda commended the Institute of Corporate Governance of Uganda for promoting good governance, which is crucial for Uganda's economic development. Recent corporate scandals showed the importance of strong oversight and internal controls to prevent malfeasance. In Uganda, weak governance is exacerbated by the often haphazard appointment of directors not always based on merit. Directors must understand their strategic oversight role and not micromanage. Good corporate governance with accountability and transparency is needed to maintain public confidence.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views2 pages

    Emmanuel Tumusiime-Mutebile: Promoting and Strengthening Good Corporate Governance in Uganda

    Uploaded by

    Mohammad Nouredeen
    The governor of the Bank of Uganda commended the Institute of Corporate Governance of Uganda for promoting good governance, which is crucial for Uganda's economic development. Recent corporate scandals showed the importance of strong oversight and internal controls to prevent malfeasance. In Uganda, weak governance is exacerbated by the often haphazard appointment of directors not always based on merit. Directors must understand their strategic oversight role and not micromanage. Good corporate governance with accountability and transparency is needed to maintain public confidence.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Emmanuel Tumusiime-Mutebile: Promoting and strengthening good

    corporate governance in Uganda


    Remarks by Mr Emmanuel Tumusiime-Mutebile, Governor of the Bank of Uganda, at the
    Gala Dinner of the Institute of Corporate Governance of Uganda, Kampala, 26 February
    2015.

    * * *

    The President, Members of Council and CEO of the ICGU;


    Distinguished Guests;
    All Stakeholders in the Corporate Governance Fraternity;
    Ladies and Gentlemen;
    I would like to thank the Institute of Corporate Governance of Uganda, for inviting me to give
    the keynote address at this first corporate governance gala. It is an honour to address you all
    at this event. I would also like to commend the Institute for the work it is doing to promote
    good governance in Uganda, which is of crucial importance to the development of a modern,
    competitive market oriented economy. I hope this gala event will contribute to strengthening
    the culture of corporate governance in our society.
    Recent headlines from around the world have brought the issue of corporate governance to
    everyone’s attention. Numerous scandals have beset the corporate world, not least in the
    banking industry where large international banks have been fined heavily for various forms of
    malfeasance, especially in the United States. The common denominator in most of these
    scandals is that public and private sector officials were not acting in the best interest of their
    organizations, their shareholders, or employees, and were often acting in violation of the law.
    They were able to act in this manner because of a combination of inadequate monitoring, a
    breakdown in internal controls, and often the ignorance and incompetence of directors.
    In Uganda, the problem of weak corporate governance is compounded by an often
    haphazard appointment process for company boards. Unfortunately, the appointment of
    board members is not necessarily based on merit. Hence the caliber of directors is not
    always as high as it should be. It is also common knowledge that many directors overstep
    their roles and get involved in micro-managing their company or institution. There is a failure
    to understand clearly the proper role of a board of directors in the running of a company or
    institution, and in particular what the oversight function of a board of directors actually entails.
    The oversight function of the Board of Directors is primarily strategic. The Board must
    provide the vision and set the tone at the top. It must also be responsible for fiduciary
    standards and prescribe methods to monitor and control the management so that abuses
    can be prevented. In addition the Board must ensure compliance with legal and regulatory
    requirements. This is why there is a shift in emphasis towards appointing non-executive and
    independent directors, who are people who are not part of the management team of the
    company. These directors are supposed to act as an independent check on corporate
    management.
    The role of a corporate board of directors has become technical and demanding and hence
    directors are required to have business and technical expertise. They must be able to
    understand the nature of the firm’s business, its financial performance and the risks facing
    the firm. I should add that the responsibility of directors today carries serious personal and
    collective liabilities.
    To maintain public confidence, companies must demonstrate a strong commitment to the
    development and enforcement of rigorous standards of corporate governance. These
    standards must encompass the relationship between a company’s board of directors, its

    BIS central bankers’ speeches 1


    management, and its shareholders. They must require corporate leaders to be faithful to
    shareholder interests and act with both competence and integrity. Corporate governance has
    become the sine qua non for any business which cares about its reputation.
    The various scandals I noted earlier have been a loud wake-up call, focusing attention on the
    need to strengthen corporate governance, to improve accountability, transparency and
    control. In response, a number of measures have been taken or proposed by various
    countries to improve corporate governance, such as the Sarbanes Oxley Act in the United
    States.
    In Uganda, the Financial Institutions Act (FIA) 2003, includes an entire chapter devoted to
    corporate governance. In addition, the BOU has issued additional Corporate Governance
    Guidelines for the financial sector. The Companies Act 2012 (chapter F) also reinforces
    corporate governance.
    Good intentions do not always prevent unintended consequences – which is why a forum
    such as this one can be very helpful in illuminating the potential pitfalls of well-intended
    corporate governance proposals. Some unintended side-effects might include high
    compliance costs, ambiguous liabilities, or reduced innovation. It is counterproductive to
    make disclosure so onerous as to make the cost of compliance prohibitive or impractical.
    Regulations and standards, whether by regulators, government, trade groups, or the
    companies themselves, should not impede the ongoing process of innovation. Rather we
    must ensure an environment that is conducive to effective and efficient operations.
    A credible case can be made that we should focus on principles as the bedrock for rules. We
    should establish key principles against which corporate decisions should be evaluated,
    regardless of whether or not a certain type of behavior is prohibited. In this way, when
    innovations make old rules obsolete, corporate leaders would have to consider not only
    whether some action would violate the law but whether it would violate a principle of good
    corporate governance. Rules are clearly necessary but they cannot replace ethics and
    exemplary leadership.
    Timely and regular flow of information to stakeholders is the grease that engenders trust. In
    elevating the standards of corporate governance in any sector, shareholders must play an
    active role to engage boards and hold them accountable. But for this to happen,
    shareholders, and indeed consumers, must have adequate and relevant information on the
    performance of their organizations.
    To conclude, I want to re-emphasize that good corporate governance is critical to the health
    of the business sector, our financial system, and the wider economy. Our economy will be
    stronger if corporate decisions are made with competence and integrity, and if shareholders
    and the public can appropriately assess the profitability and riskiness of corporations’
    business activities.
    I thank you for your attention.

    2 BIS central bankers’ speeches

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