What is governance?

Generally, governance refers to a process whereby elements in society wield power, authority and influence and enact policies and decisions concerning public
life and social upliftment.

It comprises all the processes of governing- whether undertaken by the government of a country, by market or by a network- over a social system and whether
through the laws, norms, power or language of an organized society.

Governance therefore means the process of decision-making and the process by which decisions are implemented (or not implemented) through the exercise of
power or authority by leaders of the country and / or organizations

Governance can be used in several contexts such as corporate governance, international governance, national governance, and local governance.

CHARACTERISTICS OF GOOD GOVERNANCE

Whatever context good governance is used, the following major characteristics should be present:

These characteristics are briely described as follows:

PARTICIPATION- participation by both men and women is a key cornerstone of good governance. Participation could be either direct or through legitimate
institutions or representatives. It is important to point out that representative democracy does not necessarily mean that the concern of the most vulnerable in
society would not be taken into consideration in decision making. Participation need to be informed and organized. This means freedom of association and
expression on one hand an organized civil society on the other hand.

RULE OF LAW- Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of
minorities. Impartial enforcement of law requires an independent judiciary and an impartial and incorruptible police force.

TRANSPARENCY- Transparency means that decisions taken, and their enforcement are done in a manner that follow rules and regulations. It means that
information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough
information is provided and that it is provided in easily understandable forms and media.

RESPONSIVNESS- Good governance requires that institutions and processes try to serve the needs all stakeholders within a reasonable time frame.

Consensus Oriented- Good governance requires mediation of the different interest in society to reach a broad consensus on what is in the best interest of the
whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and
how to achieve the goals of such development. This can only result from an understanding of the historical, cultural, and social context of a given society or
community.

EQUITY AND INCLUSIVENESS- Ensures that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires
all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well-being.

EFFECTIVENESS AND EFFICIENCY- Good governance means that processes and institutions produce results that meet the need of society while making the best
use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the
protection of the government.

ACCOUNTABILITY- Accountability is the key requirement of good governance. Not only governmental institutions but also the private sector and civil society
organizations must be accountable to the public and to their institutional stake holders. Who is accountable to whom varies depending on whether decisions or
actions taken are internal or external to an organization or institution. In general, organization or an institution is accountable tot hose who will be affected by its
decisions or actions. Accountability cannot be enforced without transparency and the rule of law.

CORPORATE GOVERNANCE: OVERVIEW

Corporate governance is defined as the system of rules, practices and processes by which business corporations are directed and controlled. It basically involves
balancing the interest of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.

Corporate governance is a topic that has received growing attention in the public in recent years as policy makers and others become more aware of the
contribution good corporate governance makes to financial market stability and economic growth. Good corporate governance is all about controlling one’s
business and so is relevant, and indeed vital, for all organizations, whatever size or structure.

The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board,
managers, shareholders, and other keyholdersers, and spells out the rules and procedures for making decision on corporate affairs. By doing this, it also provides
the structure through which the objectives are set and the mean of attaining those objectives and monitoring performance.

PURPOSE OF CORPORATE GOVERNANCE

The purpose of corporate governance is to facilitate effective, entrepreneurial nd prudent management that can deliver long-term success of the company. In
simple terms, the fundamental aim of corporate governance is to enhance shareholders’ value and protect the interest of other stakeholders by improving the
corporate performance and accountability. It is also about what the board of directors of a company does, how it sets the values of the business firm.

OBJECTIVE OF CORPORATE GOVERNANCE

The following are the basic objectives of corporate governance

1. Fair and Equitable Treatment of shareholders

A corporate governance structure ensures equitable and fair treatment of all shareholders of the company. In some organizations, a group of high-net-
worth individual and institutions who have a substantial proportion of their portfolios invested in the company, remain active through occupation of top-
level positions that enable them to guard their interest. However, all shareholders deserve equitable treatment, and this equity is safeguarded by a good
governance structure in any organization.

2. Self-assessment
Corporate governance enables firms to assess their behaviors and actions before they are scrutinized by regulatory agencies. Business establishments
with a strong corporate governance system are better able to limit exposure to regulatory risks and fines. An active and independent board can
successfully point out deficiencies or loopholes in the company operations and help solve issues internally on a timely basis.

3. Increase shareholders’ wealth

Another corporate governance's main objective is to protect the long- term interests of the shareholders. Firms with strong corporate governance structure
are seen to have higher valuation attached to their shares by businessmen. This only reflects the positive perception that good corporate governance
induces potential investors to decide to invest in a company.

4. Transparency and full disclosure

 Good corporate governance aims at ensuring a higher degree of transparency in an organization by encouraging full disclosure of transactions in the
company accounts

Basic principle of effective corporate governance

Effective corporate governance is transparent, protects the rights of shareholders and includes both strategic and operational risk management. It is concerned
in both the long-term earning potential as well as actual short- term earnings and holds directors accountable for their stewardship of the business

A. Transparency and Full Disclosure

- Does the board meet the information needs of investment communities?

- Does it safeguard integrity in financial reporting?

- Does the board have sound disclosure policies and practices?

o Does it make timely and balanced disclosure?
o Can an outsider meaningfully analyze the organization's actions and performance?
B. Accountability

- Does the board clarify its role and that of management?

o Does it promote objective, ethical, and responsible decision making?

o Does it lay solid foundations for management oversight?
o Does composition mix of board membership ensure an appropriate range and mix of expertise, diversity, knowledge and added value?
o Is the organization's senior official committed to widely accepted standards of correct and proper behavior
C. Corporate Control

- Has the board built long-term sustainable growth in shareholders' value for the corporation?

- Does it create an environment to take risk?

o Does it encourage enhanced performance?
o Does it recognized and manage risk?
o Does it remunerate fairly and responsibly?
o Does it recognize legitimate interests of stakeholders?
o Are conflicts of interest avoiding such that the organization's best interests prevail at all times