I am honored to have the opportunity to share with this distinguished audience my thoughts and experiences on leadership and governance.
I would like to begin by paying tribute to the organizers of this conference for your efforts to create a platform for engagement with Kenyans in Diaspora. Kenyans in Diaspora are a very important extension of our country overseas. At three million, Kenyans abroad make roughly 9% of the country’s population; and contribute immensely to our development agenda.
Let me say at the outset that I have been privileged to work in both the private sector and Government at senior levels. In these roles, I have interacted with Kenyans in diaspora in Johannesburg, London, New York, Washington DC and Tokyo among other cities, not to mention the capitals within the East African Region. I have also worked as a member of the diaspora briefly in South Africa in the early 2000s. I would therefore like to draw from these experiences in this brief reflection. I recall that during this period, interactions always focused on questions around the viability of Kenya over the long term as a stable country politically, economically and socially. I remained the eternal optimist in these discussions – I must say my position has not changed, despite the challenges we continue to face as a nation.
Many of you will know that I worked briefly in Government between 1999 and 2001. As Permanent Secretary in the Treasury, I was part of what was christened the ‘Dream Team’ and the agenda at the time was to reform institutions and processes for recovery and growth. The political and economic environment was extremely difficult, but we were able to set the foundation for many of the reforms that came to fruition in later years. The 2010 Constitution and the Vision 2030 blue print have set us in a very good place to build a just and progressive society. However reform and development do not happen overnight. Strong, capable and committed leadership is required and our electoral process is important in shaping this. Fast forward, I became Deputy CEO and then CEO of KCB Group (Kenya Commercial Bank) between 2005 and 2012. This is a bank, which was on its deathbed around year 2000 largely due to poor governance, but in recent years has become the region’s largest and most profitable commercial bank.
I led KCB during a time of a major transformation that was aimed at repositioning it for competitiveness and profitability. The transformation was not for the brand but also for the bank’s internal culture and value system as well as good governance. This transformation did a number of things for the bank including increasing shareholder value with market capitalization for the bank reaching an all-time high. One of my proudest achievements however is the high standard of leadership and governance that KCB has put in place over the years and which has set it on a sustainable path to greatness.
Since leaving KCB over the past 4 years, I have spent a lot of time working with various companies on strengthening their leadership and governance. During my time as a partner at Deloitte East Africa, I worked with local and multinational companies across the Region in the areas of governance, leadership and strategy development and implementation. The link between these three makes the difference between successful and failed institutions and indeed countries. I now run the Leadership Group where I am an executive coach. I am engaged in working with board members from companies across the region to strengthen their leadership and governance practices.
Today, Corporate Governance is an inevitable topic of discussion in boardrooms, academic round-tables, and for policy makers worldwide. Globally there have been more governance changes occurring in the last few years than in the last generation. Several events are responsible for this heightened interest. The wave of financial crises of 1998 in the US, Russia, Asia and Brazil, affected their entire economies and deficiencies in corporate governance endangered the stability of the global financial system. Corporate governance failures in United States and Europe caused some of the largest insolvencies in history. In the aftermath of these events, economists, the corporate sector and the policy makers worldwide recognized the potential long-term consequences of weak corporate governance systems, hence some of the draconian measures adopted in the US through the Sarbanes-Oxley legislation. Locally, the past two years have seen corporate failures attributed to corporate governance malpractices resulting in significant loses to the investing public – including the Kenyans in the diaspora.
Why is this relevant to this forum?
The Kenya diaspora is a significant player in this economy and must be intimately interested in its governance and leadership. Kenyans in the diaspora contributed a record $1.6 billion (Sh163 billion) in remittances, in 2015 according to the World Bank’s Migration and Remittances Fact book 2016. This is a significant amount by any standard, and provides legitimacy for a say in the country’s social and economic affairs, including equal opportunities for investment and in shaping the country’s future and its governance. Because corporate governance is primarily about structures, processes and disciplined decision-making and execution, it is inevitable that social norms and national culture play a crucial role. When a country’s overall governance is weak, voluntary and market corporate governance mechanisms have more limited effectiveness.
In the corporate sector, boards are now under intense pressure and scrutiny to get it right. The Board is not only accountable to the company and its shareholders but also has a duty to act in their best interests. In addition, Boards are expected to take due regard of, and deal fairly with, other stakeholder interests including those of
employees, creditors, customers, suppliers and local communities. The newly enacted Code of Corporate Governance by the Capital Markets Authority has raised the bar for the Boards in Kenya. The new concepts introduced in the code include - increased diversity, enhanced disclosure norms, performance evaluation of boards and directors, sustainability of business; including internal financial controls and risk management as apart of oversight of the Boards, enhancing the protection for minority shareholders, providing for investor protection and a better framework for regulation and thus strengthening the foundations of good governance in Kenyan companies.
If I look at the public sector, Kenya today is at crossroads where issues of corruption and lack of inclusivity occupy most of our attention as citizens. Poverty continues to rise and the youth remain restless. National values as set out in Chapter 6 of the Constitution makes for good reading, but have limited application in practice. Indeed the Aga Khan University conducted a research on these values among the youth earlier this year. The results were chilling: majority of the youth did not see much value in hard work, but rather saw corruption as a rewarding and profitable activity worth emulating. This is a reflection our society and leadership. Corruption has reached endemic levels and looting of public coffers is the norm for many in positions of leadership in both national and county governments. The private sector bears its share of blame as well. All this flies in the face of good accountable leadership and governance. By drawing from best practice in their countries of residence, Kenyans in diaspora need to voice their concerns and call for swift and consistent action. By creating a mechanism for sharing observations on business leadership practices abroad with local business partners, Kenya will become increasingly open to global business thinking which will influence the strategic direction of your investment in the country. As shareholders, you should also demand to be involved in creating the policies and regulations that govern the businesses you invest in. This will enable the creation of strong governance systems that ensure greater accountability and stringent reporting requirements. Make time to engage actively in the forums for Kenyans in your resident countries as well. The world is in turmoil today, and leadership, as we know it is being challenged to innovate and respond in new ways for the sake of posterity. Corporate collapses over the last ten years and the subsequent increased demand for continuous improvement and transparency in the boardroom have heightened the pace of change for boards worldwide.
Good corporate governance is needed to create a business environment of trust, transparency and accountability in order to support investment, financial stability and sustainable economic growth. In the global and highly interconnected world of business and finance where money and corporate operations constantly cross borders, creating trust is something that we need to do together. Through creation of leadership engagement platforms like the Leadership Group which I run, we can get more current and aspiring leaders to take their practices to the next level and indeed, improve the leadership and governance standards of our corporate and government institutions towards world class status.
In conclusion, I know that you have attended many conferences in your time, however this one could be different if you all resolve and make a commitment to position yourselves as a starting point for ensuring that the Kenyan diaspora community contributes to a Kenyan society that is sustainable over the long term. Your role in mentoring the youth in good citizenship will make Kenya the success we all aspire it to be.