October 2007 44527 corporate governance Lessons Learned Series better companies, better societies Launching an Institute of Directors in Mozambique: Business Leaders Drive Effort to Advance Good Governance M ozambique needs to attract investors to realize the opportunities emerging in the global economy. That need for capital drove The Global Corporate Governance the country’s business leaders to seek improve- Forum was co-founded by the ments in the governance of companies and World Bank and the Organisation their boards. Establishing the Institute of for Economic Co-operation and Development (OECD) in 1999. Directors of Mozambique (IoDmz, Instituto de It is an International Finance Directores de Moçambique) became a priority. Corporation (IFC) multi-donor “A nation’s development is not made only trust fund facility located in the with natural resources, which might create IFC/World Bank Corporate Governance and Capital wealth, but also with a change in how people Markets Department. do business. Corporate governance encourages From left to right: Américo Magaia, CEO, SOGEX; Teodoato Hunguane, and this change,” said Salimo Abdula, president of Abdul Kha Leck, President of AVITUM—Tourism and Tour Operators Association. Through its activities, the Forum the Confederation of Economic Associations aims to promote the private sector as an engine of growth, reduce the of Mozambique (CTA). and necessity of improving corporate gover- vulnerability of developing and “We had to build awareness about corporate nance policies and practices. The founders transition economies to financial governance, a concept that few knew and stressed practical approaches. crisis, and provide incentives for understood in Mozambique,” said Afonso “It is necessary to move into a situation corporations to invest and perform efficiently in a socially Mondlane, the promoter of IoDmz. “Senior where the manager’s power, from private or responsible manner. The Forum managers and board directors sought training public institutions, is clarified and made more sponsors regional and local on the value of corporate governance and transparent and ethical,” said Pequenino. initiatives that address the how to apply those standards. The institute’s “This will lead to reliable reports to boards from corporate governance weaknesses of middle- and low-income launch became the starting point for broadening management of accounting information, which, countries in the context of awareness and producing important changes in turn, allows the board to make good decisions, broader national or regional in business behavior.” which the public can trust.” economic reform programs. As the committee broadened and strength- Donors to the Forum include the By supporting the institute, prominent ened support for corporate governance within the IFC and the Governments of business community and government, its members Canada, France, Luxembourg, the business leaders underscored the developed and executed a business plan, with Netherlands, Norway, Sweden, importance and necessity of improving assistance from local management consultants, the and Switzerland. corporate governance practices. IFC Private Enterprise Partnership for Africa, and The institute quickly became the focus the Global Corporate Governance Forum. Other countries’ successes informed the plan. for advancing reforms in Mozambique. “The Forum toolkit for IoDs was our roadmap, laying out the steps we needed to Benjamim Pequenino, CEO, Governance follow for our institute’s launch and ongoing Development Institute of Mozambique (GDI) administration,” said Pequenino. (The kit and Mondlane drove the establishment of a is available at www.gcgf.org.) “Having the founders committee, composed of prominent support and counsel of the IFC enabled us leaders in the country’s private sector. Their to learn from the experiences of others — the initial support underscored the importance mistakes and the successes.” evidence. The workshop’s curriculum in- volved the IFC and the Forum. The institute’s plans include: a series of training programs targeted at board directors; providing expertise through the institute’s own staff and the Forum’s network of private sector advisors to help companies and Mozambique’s government implement corporate governance laws and standards; and, sharing successful efforts of Mozambican companies with other businesses interested in adopting best practices. “The contacts made in the course of establishing IoDmz will form the base of future partnerships,” said Mário Gomes, IFC Associate Operations Officer. 3 From left to right: Phil Armstrong, Head of the Forum; Eduardo Boechat, IFC; Benjamim Pequenino, CEO, Governance Development Institute of Mozambique (GDI); Leonardo Viegas, guest speaker, IBGC – Brazil; Afonso Mondlane, IoDmz promoter; Mário Gomes, IFC; Rui Moura, Mundiserviço’s FACTORS FOR SUCCESS consultant; Salimo Abdula, President of CTA. • Business access to global capital The IFC, through the Forum, and other • Need for public trust in companies brings pressure organizations shared their expertise in advancing for corporate governance reforms corporate governance reforms in developing • Government support and emerging market countries. The IFC, the • Passionate, committed leaders Forum, and others helped the institute obtain a • Demonstrating the business case US$140,000 commitment from the African • Expertise from an international institution • Financial support from a regional institution Development Bank and additional funds from • Authoritative resource for thought leadership the Center for International Private Enterprise (CIPE). “The IFC in Mozambique and the Forum provided examples illustrating how countries PROGRESS that adopted strong corporate governance laws • First National Corporate Governance Conference and supported companies’ efforts to implement (June 7, 2007) these reforms resulted in economic benefits,” said • Educational initiatives Pequenino. “Their evidence convinced skeptics • Interest in corporate governance broadens that better companies lead to better societies.” among companies, policymakers A business plan emerged to solidify • Regional collaboration with other like-minded institutes emerges support, broaden awareness, and achieve long- • Neighboring countries prompted to compare term sustainability without depending on donor their progress against Mozambique’s initiative assistance. A Website (http://www.iodmz.com) and brochures were among the materials developed to establish the institute’s brand. “We saw that those institutes with strong, LEARN MORE credible brands, like the Brazilian Institute of Global Corporate Mário J. Gomes Corporate Governance, were particularly Governance Forum Associate Operations Officer effective, one of many helpful points made in 2121 Pennsylvania Avenue, NW International Finance Corporation the Forum’s toolkit” said Felix Granados, a Washington, DC 20433 USA 1222 Kenneth Kaunda Avenue management consultant. Tel: +1 202 458 1857 PO Box 4053 As a result, the institute’s first workshop Fax: +1 202 522 7588 Maputo, Mozambique in June 2007 drew more than 250 members cgsecretariat@ifc.org Tel: +258 21 48 23 25 www.gcgf.org Fax: +258 21 49 62 47 of the business community, introducing them mgomes1@ifc.org to corporate governance and the supporting The next issue: Institute of Corporate Governance in Panama – The Global Corporate Governance Forum was a catalyst in helping business leaders drive reforms in corporate governance practices. Guided by the Forum and its network of private sector advisors, the institute’s founders are building awareness for the value of corporate governance among the business community in a maturing economy.