Article by Dr. Ken Wyne Mutuma
Corporate governance is a set of rules, practices, and processes that guides the conduct of persons in a company or an organization. It is the technique by which companies are directed and managed. The Mwongozo Code of Governance for State Corporations was introduced in 2015 by the Government of Kenya to provide guidelines for good governance practices in state corporations and improve their performance. It provides for principles that aim at promoting transparency, accountability, ethical conduct and building trust in the management of state corporations.
Firstly, there is accountability which is the willingness of one to accept responsibility for their actions, decisions, and the management of resources entrusted upon them. The Mwongozo code requires state corporations to establish mechanisms for accountability. This includes defining roles and responsibilities of persons, requirement of financial reports and the measuring of the organisation’s performance against its goals. Secondly, it provides for transparency which encompasses openness in communication and the disclosure of relevant information to stakeholders in an organization. State corporations are expected to maintain transparency in their way of operation especially in decision making. Transparency fosters trust among stakeholders and enhances the credibility of the organization.
In addition, the code requires integrity which is the adherence to ethical principles, honesty, and moral values in all organizational activities and interactions. The code emphasizes the importance of maintaining high standards of integrity within state corporations by avoiding conflicts of interest, conducting business with fairness and impartiality and upholding ethical behaviour in dealings with stakeholders. Further, the Mwongozo requires equal treatment of all stakeholders, including shareholders, employees, customers, suppliers, and the community at large. State corporations are required to promote equity and fairness in their policies and practices.
The code also emphasizes the importance of sustainability in the organization which fosters resilience and ethical responsibility for current and future stakeholders. This aspect is key in ensuring that the present running of a corporation bears positive impact in its long-term existence. Leadership plays a key role in guiding the stakeholders of a corporation towards achieving the expected objectives and fostering a culture that ensures sustainable growth.
Mwongozo code provides for ethical standards such as honesty and integrity, fairness and corporate citizenship and responsibility. It requires organizations to act responsibly towards society and the environment by practicing corporate social responsibility (CSR) initiatives that have positive impacts to the community. A key issue of ethical concern emphasized under the Mwongozo code is corporations adhering to all applicable laws, regulations, and industrial standards. This is important as it ensures legal compliance and minimizes legal risks.
To effectively implement the Mwongozo Code’s principles and ethical standards, organizations should establish policies and procedures that align with the Mwongozo Code’s principles and ensure that the members subscribe to the required code in the policies. They should also promote a culture of ethics and integrity throughout the organization, starting from top leadership to every employee. Regular monitoring and evaluation should be conducted to assess practice of good governance and identify areas for improvement. Finally, the stakeholders in the organizations should engage with one another to understand each person’s expectations and concerns to promote trust and accountability.
In conclusion it important to note that, Mwongozo Code serves as a guiding framework for promoting good governance practices and ethical standards in Kenyan public sector entities. By adhering to its principles of accountability, transparency, integrity, and stakeholder engagement, organizations can strengthen their governance structures, enhance decision-making processes, and build sustainable relationships with stakeholders. Embracing these principles not only fosters organizational resilience but also contributes to broader socio-economic development goals in Kenya.
