B. Odei Bempong
5 August 2008
opinion
Their impact on Economic Developments of Ghana and performances of SOE's and the sale of State Enterprises like Ghana Telecom
The effect of their incompetence would result to the following: The state institutions would not perform to bring in revenues required, to enable the government gets its corporate tax of between 35% -50%. The state institutions would not make profits after tax, and would produce zero dividends. Hence, the government's share of X% will yield no dividends. The little profits being obtained would rather be siphoned into individual pockets in the form of incentives to board members, or by means of parting undefined gifts.
The use of companies' vehicles for funerals by these board members ostensibly increases the expenditures of these state institutions, and thereby decreases their profits. The staff of these public institutions, experiencing these atrocious expenditures by non-employees of the company, also take advantage to practice illicit deals, to acquire some of the companies' incomes, reducing total revenue more. The resultant effect is that incomes to the government chest would reduce, and in order to stay in power, the government would have to institute any workable and unreasonable taxes, notably the unavoidable petroleum tax, VAT and what have you, to get funds to meet its budgets for roads construction, education, health amongst others, just because the right choice for the right people were not made.
The composition and selection of board members in the advanced countries, have received continuous research into how best these activities could be done with the highest precision that it deserves. For instance, after 1992, academic research into the role of Boards of directors in corporate governance grew exponentially, as identified by two authors, Tricker , 1994, and Clerk, 1998. Another author, Conyon, 1994 also identified that improvements in business practices are reflected in the composition of boards. From these researches, evidence has emerged from two authors, Dulewicz and Herbert, 1977, that the composition of members of board of directors who are non-executives directors, have a powerful and negative effect on the board's performance and that boards, where executive directors are in the majority have been conspicuously been observed to have potential for improvements in the state institutions in which they serve. For the purposes of clarity, a non-executive board member is one who does not hold an executive director position in any established public institution, whilst Executive board member is one who holds position as a Chief Executive or Director in an existing or previous public organization.
The above revelations indicate many advantages in forming a board with majority of Executive Directors than non-executive directors. To mention but few, Executive Directors on a board can share current economic solutions with the CEO of an organization. These board members have their own benefits and vehicles they can use without falling onto the company that they serve, taking their 'integrity' to be high. In real fact, the demands of such board members are minimal, and they would be happy for the few allowances being given.
The other advantages are sharing of knowledge and skills being applied in various organizations they serve with others in similar positions on the board. This idea of composition of a board does not mean that where there are no personnel, non-executive directors should not be included in a board's formation. In other researches, the composition of 67% being Executive Directors to 33% being non-executive directors could be acceptable, however, caution should be raised as to what level of qualification the non-executives would have. In most boards that have 33% non-executive directors, the qualification and experience of those non-executives directors are comparable to senior or principal consultants and their Executive director counterparts. The only difference is that they do not hold executive positions. For instance, a company operating in the Communication industry could have a Lawyer in the Masters level (LLM), MSc., Doctorate in Communication Engineering, Master of Business Administration, with the CEO holding Masters level in the particular industry he/she is operating, and a member with Masters in Marketing. This array of experts' energies the board meetings held hectically, other than the usual board meeting characterized with banqueting.
CONCLUSION
I would suggest that the government deviates from the selection of Board members based on partisan lines. This same government should know that, one cannot eat his cake and finds it or a chicken cannot drink its eggs and get them hatched. The SOEs are by far the higher employer of the nation, and as the country depends on these SOEs to get dividends and money for infrastructural developments, it must come from the companies that employ the higher number of the citizens. The companies in the private sector have their aim, and that the highest on their agenda is to make profit for themselves. They will fire staff when the profit they are getting is reducing. They will play all tricks to maintain a small number of employees. It is the SOEs that can help the government to reduce unemployment. If any government in African wishes to reduce unemployment it is through creating more SOEs. Yes, the poverty in Africa, coupled with lack of initiatives would mean that the governments should help. Many countries that had conquered unemployment did this through SOEs. Hence, my plea goes like this, stringent measures should be given to these CEOs of SOEs and their Boards, and if they fail the nation, they should be fired.
I do not see why a Chief Executive of a company remains in the chair for continuous five (5) years or more, when the company continues to declare loss and cannot pay dividends to the government? Even our top Chief Executive - the President has a term of four (4) years, or maximum eight (8) years and weather he performs better or not, has to go. Why should we allow non-performing CEOs stay longer and cause more damage? Let a Chief Executive account for his/her stewardship in every four (4) years or be fired. I am done.
Be the first to Write a Comment!
Copyright © 2008 Ghanaian Chronicle. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
