Does Corporate Governance Matter?

While it is necessary for large, formalized businesses, corporate business is still viewed as alien or even irrelevant by SMEs and even some bigger businesses, here, we ask and answer questions to help those who need to understand

Can effective corporate governance ensure continuity?

Yes. According to a report by UBOS on the Census Business Establishments, 94% of businesses are sole proprietorships. This clearly indicates that majority of businesses in Uganda rely on their founders for operations and continuity. Such founder-dependent businesses die with their founders. A business governed by more than one person, on the other hand, has higher chances of continuity beyond the founder.

What is corporate governance and why?

Cooperate governance is the set of structures, rules, procedures, and processes that direct and regulate an organization in its mission. It entails setting up and maintaining organs with defined roles and levels of authority, long-term planning and monitoring, checks and balances for accountability, leadership succession. Businesses, organizations and firms with good governance processes are better equipped to deal with succession challenges, guaranteeing continuity and seamless transitions when key employees leave or retire. This eliminates disruption and uncertainty, ensuring the entity`s long-term viability.

What is FRIENDS Consult role in enhancing clients’ corporate governance?  

A member of the Institute of Corporate Governance of Uganda, FCL has trained and extended capacity building to several organizations’ governance organs like Boards, Committees and Trustees. More recently, FCL was hired by the Institute of Corporate Governance in Uganda to facilitate assessments and selection for the second Corporate Governance awards process, aimed at recognizing outstanding organizations that are at the vanguard of corporate governance excellence.

Final advice?

Business founders should be quick to realize that by adopting effective cooperate governance practices early enough, their establishments stand a chance to increase their resilience to shocks (internally & externally) and ensure their long-term continuity and viability.

Written by Joseph Sserunjogi  & Andrew Obara – FRIENDS Consult Limited