Swiss join IFC to promote EAC corporate transparency
NAIROBI, Kenya – The World Bank’s private arm, the International Finance Corporation (IFC) has jointly launched a business transparency initiative with the Swiss government, to promote corporate leadership in East Africa with the aim of helping firms attract foreign investments.
The aim of the new initiative is to help firms and business leaders in Kenya, Uganda, Rwanda and Tanzania, to accept and implement good corporate leadership practices to make their businesses attractive to foreign investors who might be interested in injecting capital into the region.
“Business leaders need to move beyond setting corporate governance rules and toward adopting behaviours that embed good governance practices into corporate values and everyday decision,” Mohamed Nyaoga, the Central Bank of Kenya (CBK) Chairman, said at the launch last week.
The Swiss State Secretariat for Economic Affairs (SECO) and the IFC, are cooperating in the implementation of the East African Chapter of the African Corporate Governance Programme.
The programme aims to improve the performance of businesses in the four EAC countries by ensuring that business follow good management practices and regional priorities.
In Kenya, the corporate governance approach is anchored on the companies’ act, which defines the role of company executives and their responsibility to the protection of the shareholders interests. The companies listed on the Nairobi Securities Exchange (NSE) are subject to supervision by the Capital Markets Authority (CMA) which regulates the corporate management and capital needs of the sector.
While the aim of the current initiative is to improve the corporate structures that define how the companies are managed, there is concern about the scale of corporate involvement in illegal activity in Kenya, such as illegal tax evasion and mis-invoicing that redirects corporate tax to other tax havens.
Kenya is on the spotlight following recent international reports indicating the East African nation has been losing upwards of $6.39 billion through tax evasion by multi-national firms.
Local tax officials said while local subsidiaries of multi-national firms pretend to report losses, the profits are usually shifted out to the parent companies and held in tax haven states or foreign banks.
“The IFC is supporting businesses in critical sectors for African development,” said Cheikh Oumar Seydi (above), IFC Director for Eastern and Southern Africa. “We expect them to carry lower financial and non-financial risk and generate higher returns to shareholders.”
