Let me begin by expressing my gratitude to the Institute of Directors of Kenya for the invitation to talk its members at this interesting time for our country and Africa.
Here in Kenya, we are enjoying a rare period of peace and stability and one that we should all make good use of as corporate sectors.
Across the world, there is agreement that Africa is the next investment and growth frontier. It is with the realization that Africa too is doing more to promote trade with itself and to attract more investment by focusing on infrastructure of transportation, energy and internet connectivity.
That is why in March last year, we created the African Continental Free Trade Area Agreement, which commits countries to remove tariffs on 90 per cent of goods, progressively liberalizes trade in services and addresses a host of other non-tariff barriers. That is a huge step given that intra-Africa trade level stands at just around 20 per cent, while Europe and Asia are at 69 per cent and 59 per cent, respectively.
This meeting therefore provides us with a timely opportunity to identify and discuss issues that affect our corporate sector as a country and develop appropriate ideas and solutions. Our ultimate goal is to enhance corporate governance that will enable businesses here improve their performance and in turn create jobs for our young people and contribute to our economy.
But it goes well beyond jobs and the economy. A strong and thriving corporate sector can be a valuable ambassador for our country in ways no diplomatic representation ever can. That is what global firms like Samsung, Toyota, Sony, Apple, Microsoft, among others, have done for their countries. Corporations have also become proven tools for mobilizing resources for national development especially in the era Private Public Partnerships.
Our ultimate goal must be to have homemade equivalents of these global corporations. It is therefore in our best interest as a nation to ensure a strong and thriving corporate sector.
Kenya remains a vibrant business hub and a regional financial centre. But we have tremendous space for growth by addressing certain basics, like creating a level playing field for all businesses, ensuring a clean and efficient government, creating a prolonged low and simple tax regime and ensuring the rule of law.
For companies to be successful, competitive and sustainable, we need a high standard of governance both in public and private sectors.
We need enhanced corporate transparency from businesses that helps investors to easily analyze the risk profiles and investment potential of companies, monitor their progress and performance, and take action when they believe that directors are not acting in the interests of the companies.
Helping businesses set up here is however just one small portion of a much bigger and complex picture. As we make it easy for corporations to set up shop, we must also attend to related issues like modernizing the corporate winding-up regime; including clear protections for creditors.
If we are going to be a strong and credible corporate destination, we must also work on clear corporate rescue procedures.
We need to come up with ways of ensuring that companies with long-term business prospects facing short-term financial difficulties are rescued. That works in the interests of creditors, shareholders and employees.
As we pursue trade and investment across regions, we must come up with how best ways to resolve cross-border corporate issues.
It requires that we strengthen our front-line regulators, in this case the Nairobi Securities Exchange and empower it to promote the corporate governance of listed companies. The regulator must have capacity for risk management and ensuring disclosure and the accountability of directors. In keeping with global trends, the regulator must incorporate the environmental and social disclosure requirements regardless of their place of incorporation.
It is also important for companies to ensure open and transparent engagement with shareholders to promote consensus-building, pre-empt aggressive shareholder activism and enhance corporate governance.
To reap the benefits of envisaged intra-Africa trade, we need to work together as governments and private sector to ensure win-win outcomes out of the African Continental Free Trade Area Agreement.
Seeking a win-win is important given that the agreement brings on board a diverse membership of least-developed, landlocked, small-island, and lower- and upper-middle level countries, as well as countries in conflict.
In the end, the answer to unlocking Kenya’s and Africa’s growth potential is not what they do in Beijing, Washington, DC, London or Paris. It is what we do here in Kenya and in Africa as business and political leaders.
Realizing these goals therefore requires that we build a new coalition in this country.
We require a new and strong coalition between the government, the corporate world, civil society and the faith-based communities to tackle the corruption and impunity that is holding our political and corporate sectors hostage.
We need a coalition that helps us realize a new nation guided by principles of dignity, prosperity and security of citizens as opposed to individual needs.
We need a strong collaboration for our country to achieve changes in our system of governance that will make us realize national rebirth and end the ethnic antagonism and divisive political competition that have become our way of life.
Not everyone agrees, but anyone with the interest of Kenya and that of future generation at heart cannot deny that Kenya has gone full circle with its divisions and that over the years, we have been witnesses to unity and hope being followed by discord and division between our independence and our last election. Nobody can deny that over the years, relationships between our ethnic groups and political formations have deteriorated and it seems to be getting worse with every general election.
No one can deny that from the high pedestal of unity that characterised our struggle for independence, we have increasingly and progressively sunk lower, and relationships between our communities and political formations have become that of aggression and antagonism. We cannot deny that for some time now, our country has been defined by corruption and violence and this is taking deeper roots locally and abroad and all these things affect businesses negatively.
We cannot grow and we cannot build a responsible corporate culture when people have to pay a bribe to start a business or get a tax compliance clearance.
It is my hope that we can work together and realize these high ideals that will ensure a sound environment for business to thrive. We need a strong and new coalition to stop our country from suffering same tribulations that we have lived with since 1963. It is good for the country. It is good for business.