Features Sustainable Wealth Creation, Dec 2006 Stamping Confidence on Local Business Ethics? What’s it? Inside Business Ethics: A Founda- tion for Economic Growth Applying Corporate Gover- nance: The Dfcu Experience Micro-Finance institutions need training and profitability Curbing CORPORATE FRAUD: Good operational Leadership needed Institute of Corporate Governance of Uganda Sustainable Wealth Creation, Dec 2006 Features Institute of Corporate Governance of Uganda Sustainable Wealth Creation, Dec 2006 Features Sustainable Sustainable Wealth Creation, Dec 2006 Wealth Creation Vol IV 2007 Contents Editorial..............................................................4 Sustainable WEALTH Creation Journal is published quar- Foreword.............................................................5 terly by the Institute of Corporate Governance of Uganda (ICGU); this publication is the fourth issue. With the Private Sector playing an increasingly critical role in the Uganda’s Ethics.in.Business.-.A.Necessity........................6 Economy-as is else where. The objective of the journal is to afford Business Leaders and Management Experts opportu- Business.Ethics..................................................7 nity to address Corporate Governance issues of concern, for better competitiveness and Sustainable Wealth Creation. Business.Ethics.-. The Institute of Corporate Governance: A.Foundation.for.Economic.Growth................10 The Vision: An enterprise sector that upholds international best practice in corporate governance. Applying.Corporate.Governance:. The.Dfcu.Experience....................................... 12 The Mission: To promote excellence in corporate gover- nance principles and practice. Curbing.Corporate.Fraud:. Editorial Committee: Good.operational.Leadership.needed.............. 17 Chairman: Capt. Gad Gasaatura Secretary: Dr. Jan Tibamwenda ICGU.Activities.in.Pictorial..............................20 Members: Mr. Leo Kibirango, Mr. Simon Rutega, Mr. Vincent F. Kaheeru. Micro-Finance.Institutions.need.training.and. Consulting Editor: Ms. Jane Gitau profitability........................................................22 Editorial Assistant: Ms.Doreen Mbabazi Ethics?.What’s.it?.............................................24 Please forward all correspondence to: The Chief Executive Officer, Institute of Corporate Governance of Uganda (ICGU) Corporate.Social.Responsibility.(CSR):. 3, Portal Avenue Lifeline.to.the.future?.......................................29 Crusader House, Ground Floor P. O. Box 27542, Kampala - Uganda On.“Business.Ethics”.-.A.word.from.Eng..Ivan. Tel: +256-41-250239/7 Kyayonka,.Country.Chairman,.Shell.Uganda. Fax: +256-41250238 E-mail: [email protected] Limited,.............................................................31 Typesetting, illustrations and Design Layout by: Stamping confidence on Local Business.........33 MPK Graphics LTD Plot 41 A/B Nkrumah Road Maggie.Kigozi:.Growing.Business.in.Uganda.35 P. O. Box 30596 Kampala - Uganda Tel: +256-41-235751 / 075-441548 Readers’.Corner................................................39 Institute of Corporate Governance of Uganda Institute of Corporate Governance of Uganda Sustainable Wealth Creation, Dec 2006 Editorial reforms that have imposed fiscal disci- infrastructure. One challenge we need pline, restructured public expenditure, to take on as a nation, without a doubt, and liberalised the economy, following is to combat the scourge of corruption a period of civil conflict (1970s and – including business and professional early 1980s) when Uganda’s economy ethics. Questions of Ethics and Moral- spiralled out of control. ity have been with us for a long time. And we are not alone. Just the other Key reforms successfully implemented day, BBC reported that the Americans included the enactment of an Invest- had handed over Saddam Hussein to ment Code offering opportunities, in- the Iraqi government, and the execu- centives and protections to domestic tion was expected in 24 hours. Predict- By Capt. Gad Gasaatura and foreign investors, an independent ably, the White House team came out Chairman, Education & Training Committee, ICGU role for the central bank, enhancing with straight face to deny that such a Senior Consultant Aclaim Africa Limited its capacity to manage the strength- thing had happened. Well, the guy was ened financial sector; overhaul of the hanged within 18 hours! Again, on the s there a formula as to what it trade regime, abolition of state com- eve of 7th July 2006, a senior member takes to create wealth? Can we modity, marketing monopolies, and of the MI 5, Britain’s top intelligence as individuals, communities privatisation of public enterprises. department, informed the British Par- or nations sustain creation of Today, Uganda has one of the best liament that there was no risk whatso- Iwealth over long periods? These are investment climates and the most lib- ever, that London could suffer any at- questions over which philosophers, eral trade regimes in the region. This tack. Security measures were in place. economists and modern business lead- is well demonstrated by the growth of “BBBANG! Bang! Bang!” London was ers have wrestled with for a long time. repatriated funds by Ugandans, in the bombed the very next day. Well, Lon- There are no ‘cut and paste’ formu- Diaspora (US$700m), the doubling of don was trying to get opportunity to lae that will work in every situation. investment funds to US$ 1.7 billion in host the 2012 Olympics. No way was But there are certain constants, with- 2006 and the overwhelming success of anyone going to say the city was un- out which no success can be realised. Stanbic’s IPO. Whatever the shortcom- safe. But excuse me, is the public at Lee Iaccoca once said: “In the end, all ings of the country – we have been fault for being increasingly cynical of business comes down to three things able to compete favourably with many leaders? Why do we not buy and be- – People, Products, Profits. But people global players in attracting investors. lieve these ‘official’ story lines? Prob- come first; for without them you can- And thankfully, they are mostly in ‘long ably, because we have been lied to once not do much.” Business ethics is about term’ investments – a great vote of too often. Twice bitten, thrice shy. We having good people in the company as confidence in our economy and politi- are still waiting for the ‘find of WMDs’ a loyal, competent workforce with in- cal stability. The wide-ranging reforms in Iraq, of course. Were we not told tegrity. In the marketplace, you need have resulted in a radical improvement they know where they are? suppliers and consumers you can do of Uganda’s main economic funda- business with – at the minimum cost mentals and provided a strong plat- Closer home, power cuts begin, though and risk. Nations and communities form for sustained economic growth. we have two hydro-power plants at Jin- need enhanced certainties – stable The rapid recovery of Uganda’s small ja, with installed capacity of 380 mega suppliers and markets, with mininmal but important industrial sector, the ex- Watts. The water level in L. Victoria external interference. “Uganda’s im- ports and currency stabilisation sharply dropped nearly two metres! Hard work pressive track record as a fast reformer illustrates this point. begins for the poor ‘Public Relations has been well documented and widely Officers’. They try to explain that it acclaimed” (R. Reinikka and P. Collier, All the above notwithstanding, Uganda is actually the unusually long drought 2001). The country recorded robust must commit to lowering investment that has caused the water level in the economic growth averaging 6.8 per- risks and to reduce cost of doing busi- lake to drop. Public response? “Listen cent in the period 1990–2003 (World ness, by implementing efficiency-en- to those liars. Why can’t they for once Bank, 2004), thanks to political stabil- hancing reforms, strengthening key in- give us the facts?” Be honest. Guard ity and to prudent macro-economic stitutions, and providing better physical your integrity. Institute of Corporate Governance of Uganda Foreword Sustainable Wealth Creation, Dec 2006 Foreword By Hon. Ezra Suruma Ph.D, Minister of Finance, Planning and Economic Development there is a ray of hope that our re- gion of East Africa has not been congratulate the Institute of Cor- left out by the growing awareness porate Governance of Uganda of the need to carry out business for the production of this fourth in an ethical manner, and develop- issue of its Journal – Sustainable ment of a level playing field using IWealth Creation. I commend the Insti- the same high-standard rules. tute for focusing on an important and topical aspect of corporate governance, “business ethics” which means carrying haviour of its people – that are crucial out one’s businesses in a morally cor- for its competitive success and image. rect and honourable manner. Business For these values to be effective, they ethics is a recognised remedy to the have to be communicated within the vestors (shareholders, suppliers challenges of individual and organisa- business and built into its processes. and other trading partners) from tional behaviors as it allows businesses unfair practices; to do the right thing, in the right way, Despite the challenges, there is a ray of • The Financial Institutions Act 2004 for the right reason, and for the com- hope that our region of East Africa has was enacted to improve Corporate mon good of mankind. not