The FINANCIAL — The current financial crisis is an opportunity for both companies and governments to take a break and refocus, said Sir Mark Moody-Stuart, chairman of Anglo American plc, at the University of Stellenbosch Business School (USB) in Cape Town.
Sir Mark, based at the Anglo American plc headquarters in London and a member of the Advisory Committee of the USB's Unit for Corporate Governance in Africa, spoke at a USB’s Leader’s Angle talk event, attended by a large audience of alumni, academics and business leaders on Thursday, 6 November.
“The current shock should be used to stop and think of better solutions. The break should be used to 'catch a breath', and requires cooperation from government, business and civil society, instead of each one taking short-term actions in certain areas,” said Moody-Stuart.
He said mining and oil companies, which all have several major projects and now – as a result of the crisis – find cash flows drying up with the "release valve" of loans from banks not being there, are forced to stop projects.
Companies tend first to withdraw projects from countries which they perceive to be not well governed, before they start withdrawing projects from the better governed countries, he said.
Moody-Stuart said sound governance of companies and countries is the key to managing the impact of the crisis. This has to be done in a transparent way at all levels.
“There is a tendency to look for global reforms, but the danger of looking for global reforms is that companies are dodging the issue. In our country (Britain) it was regarded as essentially a USA problem, but we had problems too,” said Moody-Stuart.
He also said multi-lateral institutions, like the IMF, have to help well-managed countries and they have to continue investing in areas like education and health.
Moody-Stuart concluded by saying Africa has some better governed countries and some that are less well governed, but he is generally optimistic about the prospects of the continent.
Also at the Leader's Angle event Daniel Malan, head of the Unit for Corporate Governance in Africa at the USB, launched the Unit’s case study competition.
The Case Study Competition, sponsored by UK-based Hermes Equity Ownership Services Ltd (Hermes), invites academics to submit case studies on corporate governance in Africa.
Through this competition the Unit hopes to make a contribution to the establishment and development of a data base of African case studies.
“It is the intention of the Unit to publish a selection of cases in association with the Richard Ivey School of Business in Canada, the second largest producer of case studies in the world,” said Malan.