The wheel behind every successful organisation is its internal governance system, says Mr Japheth Katto, a corporate governance and financial services regulation consultant.

Unfortunately, in Africa, that wheel, Mr Katto says, is either not developed in most of the enterprises or at worst, non-existent explaining the rampant business collapse or underperformance of most of the continent’s enterprises.

For starters, what is corporate governance? A Google search or a chat with scholars will give you a variety of definitions about the subject but the term simply means a set of rules and regulations through which a given organisation is controlled or properly managed.

Does it then pay to have good corporate governance in an SME or organisation? The answer is absolutely in affirmative, according to Mr Katto, one of the eminent speakers lined up at the 2nd edition of Kampala Strategic Leaders’ Summit to be held at Sheraton Kampala hotel on the 27th of February 2020.

“Whether small or big, your organisation needs good corporate governance. It is not for only listed companies as many people think,” Mr Katto says.

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Corporate governance comes with a number of benefits some of which are highlighted below;

Ease to attract external funding.

Attracting funding for the growth and expansion of SMEs remains a big challenge in most parts of Africa. Did you know, however, that with good corporate governance of your SMEs, you can easily attract funding?

“There is no reason why well governed SMEs should not be able to raise capital through the stock market or capital markets either by issuing bonds or shares. What investors and lenders want to see is transparency and whether systems are working,” Mr Katto said in a pre-Summit interview.  When such funding flows to an SME, it makes it easy to attract the right skills and talent to drive the growth strategies of the enterprise which is the ultimate goal of businesses.

Sustainability of the enterprise.

Mr Katto says another crucial area of corporate governance is the assurance it gives a business and its shareholders or stakeholders of a guaranteed future. Individuals, be it enterprise proprietors or employees, come and go but there must be room for passing on the mantle from one person to another. “That can only happen when there are appropriate corporate governance systems in place in the organisation. Short of that, when a business owner dies, the likelihood that the organisation can easily collapse is very high,”

Tapping into the creative minds of others.

We live in the era of an unimaginable human creativity and digital innovations where new and better ideas of doing things have become major game changers in the away organisations operate. Hence the success or failure of organisation is no longer solely determined by its financial or material capital but by the collective brains of the people working within that entity. Attracting people with the best talents and skills have become a herculean task for many SMEs due to the associated costs. With corporate governance in place, however, Mr Katto says there are many opportunities to tap into the expertise of many experienced professionals who have new and better ideas of running an organisation but that only happens when there are systems in place to manage the affairs of an organisation.

“This is why putting in place, in your business, the appropriate systems to attract people with expertise in C-level corporate leadership, auditing, and accounting, for example, make it easy and comforting for them to serve on your boards, or come in as staff,”

This can only happen when there is separation of management of the enterprise from the owners, he adds.

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Proper risk management.

SMEs face many challenges raging from funding, access to markets, natural calamities, and attracting talents among others. Without a system in place to manage such challenges, many SMEs will fail to keep up with the tasks at hand and instead fold their operations.

If you really want to be successful in business, consider corporate governance as a crucial component of your enterprise. On 27 February, that should be a special day for you to get practical lessons on how to address governance challenges in your organisation. Book yourself a place for the Leaders’ Summit that will offer practical and innovative ways to the growth challenges of enterprises in Africa.

Some of the topics that will be discussed at the summit are; ICT implications on entrepreneurs and enterprises, how SMEs can tap into Foreign Direct Investment and how SMEs can benefit from the recently signed African Continental Free Trade Agreement.

Register now and be among the early birds who will be equipped to fish for yourself.