REGULATIONS TO ACCELERATE ECONOMIC RECOVERY

TENDAI SAHONDO

January 21, 2011

The Chairman of the National Code on Corporate Governance project steering

committee, Tinashe Rwodzi has reiterated the need for a comprehensive set of laws to
stop economic challenges facing the nation.

Addressing captains of industry in the capital, Rwodzi said the Corporate Governance
Code is essential to the economic turnaround process.

“Zimbabwe needs a comprehensive Corporate Governance Code to address key issues

such as corruption which have crippled our economy. The code will restore public and
investor confidence in the market and play an instrumental role in preventing another
financial crisis,” said Rwodzi.

The restoration of investors’ confidence and trust in the local market is expected to
enable companies gain access to external financing, the country desperately needs to
stimulate economic growth and strengthen the economy.

Globally, financial crises and corporate scandals are precipitated by ineffective boards,
weak internal controls, poor audits, lack of adequate disclosure and lax enforcement.

The crafting of a corporate governance code is expected to effectively deal with these
issues and result in the creation of appropriate management systems and efficient control
structures.

Rwodzi said the code would strike a balance between economic and social goals,
individual and communal goals, boards and shareholders among the corporations, boards
and stakeholders.

“The ethics enshrined in the code will prompt boards to act in the legitimate interests and
expectations of the company, its shareholders and stakeholders. This will make the
boards more accountable,” he said

The code will also help us create sustainable leadership that values effectiveness,
efficiency, responsibility, transparent and accountability.

Various organizations including the Standards Association of Zimbabwe (SAZ) and the
Institute of Directors Zimbabwe (IoDZ) are working together to examine existing statutes
and their relevance to business today.

The organizations are also expected to consider other Corporate Governance codes in the
region, research the relevance of other codes to Zimbabwe and undertake research on
what companies and investors want for Zimbabwe.

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A draft code is expected to be formulated in the near future which will take into
cognisance the local culture. The code will then be market tested to rate its acceptance
and then incorporate relevant changes and repeat the process until best practices are
established.

“Our corporate governance code will reflect our country’s needs, incorporate best
practices and be a national product. The code will incorporate Zimbabwe’s viewpoint and
recognize our uniqueness with respect to legal systems, economic development, political
and economic environment and cultural practices,” said Rwodzi.