Africa urged to make most of widespread optimism
African - Economic - 07-29-2010

Overwhelming majority 87% of CEOs of companies headquartered in Africa expect to see regional growth over 2011, the highest percentage anywhere in the world, according to a report issued by PricewaterhouseCoopers on 27 July 2010. Given such high expectations for growth, it was vital for economic communities in Africa to promote regional co-operation and improved standards of corporate governance, in order to facilitate expansion of trade across the continent and ensure compliance with increasingly complex regulatory requirements, said Tom Winterboer, PwC financial services leader for SA and Africa. However, regional economic communities in Africa suffered from a lack of trust due to historical tension, and this needed to be addressed, he said.

Mr Winterboer said that the establishment of trade blocs made economic sense, because the countries involved were usually already each otherquotes biggest trading partners. Existing trade blocs in Africa include the Economic Community of West African States, the Southern African Development Community and the East African Community. “Also, many manufacturing and service companies in Africa are keen to expand their regional production and distribution footprints, and the impediments to this should be removed,” he said. Mr Winterboer said the African financial services sector in particular could benefit from improved regional co-operation. “Banks are looking for uniform regulatory structures across individual markets to facilitate regional expansion,” he said.

Recognising the high cost of complying with multiple regulatory regimes, regional economic communities such as the East African Community were working towards common publication and disclosure requirements for regional banksquote financial statements. Mr Winterboer said that across Africa, regional economic communities could support sharing of information among central banks, and promote consolidated supervisory regimes for regional banks to encourage growth in the sector. He said the issue of good governance was also becoming a priority with regional trade in Africa expanding and becoming more complex. “Increasingly, companies in Africa are adopting international governance standards, either voluntarily or in response to pressure from capital markets, which should not be underestimated.” He said these standards should not only be audited, but embedded in the business culture of companies. Mr Winterboer said the private sector should be actively engaging governments and regulators to ensure countries and regions implemented appropriate frameworks. SAquotes King 3 report on corporate governance had served as a benchmark for African and other international jurisdictions.


Source: Business Day