It is not often that we see political leadership act courageously to uphold principles of good corporate governance, which makes a recent decision taken in the United States – one of critical importance to Africa – worth stopping to savour.
Last month the Securities Exchange Commissioners of the United States (the SEC) voted 2-1 to uphold regulations which will force all companies listed on American stock exchanges, numbering about 1,100, to declare payments of more than U.S. $100,000 to foreign governments – with no exceptions allowed.
The regulations give force to the law known as the Cardin-Lugar Extractives Transparency Amendment, which is part of the wider financial reform law passed after the 2008 global financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The importance of the new legal regime is best articulated by Najwa al-Bshti, former Head of Contracts at the National Oil Company of Libya.
In a New York Times article on the implications of the change, she states: “We need to ensure that bidding is fair and open, the deals are transparent and revenues are used properly. Public disclosures and legislative oversight of contracts and payments are crucial.”
She adds that laws which allow exemptions if a foreign government objects are a tyrant’s veto. If anybody knows where the bodies are buried, she does.
The real challenge now is to work to ensure that similar legislation is enacted in Europe and beyond. We cannot and should not allow this legislation to stand alone and effectively disadvantage U.S. exchanges and listed companies.
European leaders love to lecture Africans on corruption and accountability. It is now time for them to practice what they preach.
Emerging powers should also come on board. China, in particular, has always maintained that it is a great friend and partner of Africa. It is time to demonstrate its friendship and to clarify whether theirs is a friendship with African people or with only a handful of corrupt dictators.
More to the point, we need to ensure that we in Africa are enacting similarly transparent legislation. If we are to ensure that good governance – covering all aspects of transparency, corporate and social responsibility – becomes the norm in Africa for all foreign investors and African governments, it can only be achieved through domestic legislation.
This SEC ruling, and the hard work of the U.S. senators and congressman responsible for the reforms that underpinned it – Senator Chris Dodd, Representative Barney Frank, and Senators Benjamin Cardin and Richard Lugar – has shown the way. Which of our leaders will now have the courage to follow suit?
Mo Ibrahim founded the African mobile operator Celtel International and now chairs the Mo Ibrahim Foundation, which promotes good governance and leadership in Africa.