UNITY UNIVERSITY

ADAMA SPECIAL CAMPUS

DEPARTEMNT OF MBA

ETHICAL AND LEGAL ENVIROMENT

GROUP ASSIGMENT
ETHIOPIAN CORPORATE GOVERNANCE AND
STAKEHOLDER MANAGEMENT PRACTICE

Prepared by ID_No
1.Betelhem Abayneh MBA/R/0417/14
2.Betel Mekonen MBA/R/0434/14
3.Firealem solomon MBA/R/0408/14
4.Hana Teshome MBA/R/0416/14
5.Dems Gashaw MBA/R/ 0447/14
Submitted to

Milkiyas A (PhD)
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Abstract:

*The review of legal documentsand regulatory(such as Commercial codes, various

proclamations, regulations and directives, etc.)Collected form secondary
Sources.The empirical results of the study has revealed that there is no adequate
provision that requires the reporting of the Corporate governance characteristics
and issues such as ownership structure, board size, board qualification, training,
selection process, tenure period, age limit, internal control systems, audit rotation,
and others issues like environment report, labor relation, social responsibility, risk
management and the like either in Commercial code of 1960 or in the
memorandum and articles of association or other special laws issued for regulating
purpose by regulatory bodiesand no mandatory minimum disclosure
requirementsof items that should be reported on the annual reports but
organizations are disclosing voluntarily[1].

*On Corporate Governance Practices Landscape in Ethiopia Past, Present and

Future. The objective is to investigate the status of corporate governance practices
of Ethiopian Share companies. Since the corporations’ good governance practices
is important for attracting the foreign capital flows through investment and it is
helpful tool to ensure the promotion of the economic growth and transformation in
business sector This research paper is focused mostly to give a reflection on
corporate governance practices landscapes by taking into account different
dimensions of corporate governance that affect the climate of doing healthy
corporate business for the purpose article review were carried out; together with
this interview and survey were developed by considering commercial codes of
Ethiopia, other legislatives and international best practices to be carried out with
chief executives officers of selected corporate sectors and government authorities’

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and survey data were collected from different stakeholders. Based on Qualitative
analysis carried out the findings on the landscapes of corporate governance
practices indicated rising and falling in past two epochs and we were not in a
position to talk about corporate governance practices in the country due to the fact
that there was deep rooted problem of ownership that affects corporate governance
practice too[2].

*Stakeholder management is one of the most essential parts of project

management. Disagreements and change in project characteristics (time, design
and budget) at the time of construction in Ethiopia were mostly occur due to the
influence and poor participation of some stakeholders in the project[3].The
stakeholder identification implement as indicated in stakeholder management plan.
It was discussed that the interests and responsibility of the key Stakeholders were
very critical to the effectiveness of the projects. The stakeholder management
system was found institutionalized (part of organizational body) but it was not
functional (the functionality was under quotation). The study to somehow revealed
challenges like low commitment, conflicting interests, personal benefit seeking,
ineffective engagement and communication, low understanding of different issues,
deviation from common agreement, unrealistic expectations, environmental peace
is critical and high cost of management rankly were found to effect on the
performance of the projects in the organization. Finally, it is recommend that all
stakeholder should be understand project goals and objectives, ensure strong
engagement and communication, identify relevant stakeholders from the project
planning, ensure functionality, accountability and transparency of stakeholder
management and ensure full commitment from all stakeholders[4].

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Background Introduction

Corporate governance, i.e. the system by which companies are directed and controlled, has
become a key topic for legislation, practice and academia in all modern industrial states as well
as it has received wide attention in recent years both in practice and in academic research .
Significant academic work confirmed strong links between financial development, economic
performance, and corporate governance . Failure of giant corporate groups in the globe
strengthens the demand for good corporate governance[2].

Literature review

1.Corporate Governance Landscape in Ethiopia Past

Based on empirical findings which is solicited by the previous researchers and

based on the interview and survey carried out the corporate governance practices
of share companies in past in the three epochs (Capitalist-Oriented or Pre 1974,
communist or 1974 through to 1991 and capitalist oriented or 1991 onwards)
showed the corporate business in the form share company was indicating a rising
good starting phase at that time in the imperial period and totally the share
company dealings and governance drastically at falling stage in the present era that
is 1991 onwards though there is tremendous changes in share company business
dealings and the formation of many corporate or share company is indicated the
rising nature of the business sector but the governance practice were still
overlooked.[2]

2.Impacts of Stakeholders on road construction project management Power of

stakeholder

In this research has been analyzed by the decision making or influencing capacity
and changing projects overall procedure and interest of stakeholders is measured
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by their vested interest on projects. The interest of stakeholders will have two
angles: either to give their best input for the success of project or to satisfy their
vested (self) interest. So it will have both positive and negative impact on the
project‟s success which will be analyzed later[4].

2.1.Identification of Stakeholders

If you leave out an important stakeholder or their department‟s function and don‟t
discover the error until well into the project; it could be a project killer [5]. It may
not be difficult to identify commonly known stakeholders; the problem is
identifying new stakeholders. For such purpose, researchers use different methods.
Guidelines in the organization, professional services, directed by higher
authorities, interviews, public consultation, formal memos, and questionnaire are
methods recommended by [6]. Stakeholder impact index [7] is also another method
to identify stakeholders. In this approach stakeholders are identified based up on
their power and interest on the project. A little similar but different approach is
used by [8]. In this approach, stakeholder-influence network developed and started
with the selection of key stakeholders (high interest, high power „Players‟) from
the power-interest grid, refined in the light of their network links.

3. Benefits of Stakeholder Engagement

Well managed projects, although long and complex, create long- term economic
gain and social values meaning that proper use of taxpayer’s money. When done
correctly, stakeholder engagement provides opportunities to further align clinical
research practices with societal needs, values, and expectations, helping to drive
long-term sustainability and stakeholder interests.

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Stakeholder engagement is intended to help administrators fully realize the benefits
of applying community and patient inter- est in hospital programs, and to ensure
that research and program changes benefit those who are most directly affected.

The stakeholder focus group is a communication medium through which the

opinions of individuals or groups of individuals who are impacted by the research
can be elicited. Focus groups can also serve to clarify each stakeholder’s role and
responsibilities, as well as promoting an overall understanding of the project
requirements. Such processes also provide stakeholders with an environment in
which they can express their opinions and feel that they have been heard.[9].

Food safety system:-

Ensuring food safety to protect public health remains a significant challenge in

both developing and developed countries

Conclusion &recommendation

The concept of corporate governance is much broader than the concept of

corporate management. Besides, those corporate governance system weaknesses
existed today there is a bright future for the development of good corporate
governance practices in the country since there are a lot of beginnings are rising on
the subject such as the formation of Ethiopian Institute of corporate governance,
institutional framework changes, issuance of directives by the national bank of
Ethiopia on corporate governance to the financial sectors.

The major problems for the development of good corporate governance practice
are lack of independent media and judiciary system, low level of accounting and
auditing practice, lack of competency based recruitment and selection rather based
on their proximity; no true independence on board members and top management.

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Most companies operated by in traditional way the board members, executive
officials, the management assigned without taking into account their proper
educational background rather based on their proximity or relation indicated there
is no true independence on board members and top management.

Recomandation

The Ethiopian institute of corporate governance and ministry of trade should be

encouraged to work more on the subject through panel discussion on contemporary
issue of corporate governance practices with the business community and different
stakeholders to create awareness how it is important for the success of their
business and growth of the country’s economy.

The country should establish an institute of directors for training, raising awareness
and education for business community, ceos, directors and board members by
enriching the institute with qualified human resources on the area of corporate
governance.

Reference:

1. Teferi deyuu alemi, department of commerce, punjabi university, patiala, india

and dr. J.s. pasricha(professor), department of commerce, punjabi university,
patiala, India. Corporate governance reporting legal and regulatory environment in
ethiopia. International journal in commerce, it & social sciences. Vol 3. 2016.

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2. Prof. G.s. batra (advisor), Mr. Biruk ayalew wondem, corporate governance
practice landscape in ethiopia: past, present and future, international journal of
research in finance and marketing (ijrfm).vol 6.2016.pp 46-57.

3 Sintayehu Assefa, Zewudu Tefera, Murad Mohammed, stakeholders impact

analysis on road construction project management in Ethiopia: a case of western
region, international journal of engineering and technical research
(ijetr),vol.,2015,pp 2454-4698

4. St. Mary’s University,( feb-2021), , project stakeholder management,

stakeholder governance stakeholder engagement.. Available:

5. K. Heldman, “project management professional exam study guide,” 5th ed.

Indianapolis, in: wiley publishing, inc, 2009, pp. 5-6.

6.j. Yang, p. Q. Shen, l. Bourne, c. M. F. Ho and x. Xue, “a typology of operational

approaches for stakeholder analysis and engagement: findings from hong kong and
australia,” construction management and economics, vol. 29, no. 2, 2011, pp. 145-
162.

7. S. Olander, "external stakeholder management analysis in construction project

management," phd thesis, construction management, lund university, lund, 2006.

8. F. Ackermann and c. Eden, "strategic management of stakeholders: theory and

practice." european journal of operational research, 2011, pp. 179-196.

9. Seithikurippu r. Pandi-perumal1*, sohel akhter2, ferdinard zizi1, girardin jean-

louis1, chellamuthu ramasubramanian3,4, r. Edward freeman5 and meera

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narasimhan6,7. Project stakeholder management in the clinical research
environment: how to do it right.2015. Published.

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