South Africa: a bellwether for the continent?

Since the end of apartheid, South Africa has won a well-deserved reputation for good corporate governance and has reaped the benefits in terms of foreign investment. But Africa as a whole is receiving less foreign direct investment than ever: in 2003, the continent received just 3% of the world's foreign investments.

by Corporate Governance
Last Updated: 23 Jul 2013

There is a strong foundation for South Africa's corporate governance to grow further and become a beacon for the rest of the continent. In 1994, The King Report, produced by the Institute of Directors in South Africa, identified seven key areas of governance: discipline, transparency, independence, accountability, responsibility, fairness and social responsibility.

It encourages change through espousing principles but has no force of law behind it. Four years later, the Insider Trading Act enabled the Financial Services Board to take more forceful action against illegal transactions. In 1995, the Johannesburg Stock Exchange (JSE) made it compulsory that listed companies disclose the extent to which they had complied with the recommendations of The King Report.

South Africa could regulate private funding of political parties to prevent corruption scandals involving company donations to political parties, and South African boards should increase the number of independent directors. South African companies typically have closed structures (many are family or state-owned). The next big challenge is for them to become more transparent.

Corporate Governance in South Africa: a bellwether for the continent?, Melinda Vaughn and Lori Verstegen Ryan, Corporate Governance, Vol 14 No 5, September 2006

Find this article useful?

Get more great articles like this in your inbox every lunchtime

How to use workplace conflict to your advantage

But beware the festering feud.

Efficient chickens, less stuff, more optimism: The real way to address climate change ...

What is dematerialisation, and why does it matter?

The 5 behaviours of charismatic leaders

How to become more inspirational (without having a personality transplant).

When should you step down as CEO?

Bob Iger's departure poses an unpopular question for bosses.

The death and resurrection of the premium customer

Top-end service is no longer at the discretion of the management.

What HS2 can teach you about project failure

And how you can prevent projects going astray.