Africapitalism in Practice: A Corporate Governance Framing

Africapitalism, an emotive and philosophical approach to capitalism and management, emboldening the private sector to contribute to Africa’s development through socio-economic prosperity based entrepreneurship, has continued to grow in leaps and bounds. However this ambition to restore ‘African-ness’ in moral capitalism will only succeed with a clear and objective frame of reference as the ethical and moral issues it seeks to address are often neither here nor there, defying clarity in terms of whether they are right or wrong. This will challenge its interpretation, acceptability and usability in decision making and governance. This is no doubt an important challenge for corporations adopting Africapitalism as a moral framework. However this is not the central focus of this article – In an ongoing work with colleagues, we are critiquing the Africapitalism concept itself and contrasting it with Islamic finance, a similar moral framework, and arguing for a more realistic implementation of Africapitalism for it to be useful, sustainable and to outlive its proposition and propositioner – Mr. Elumelu. Rather in this short piece, I will focus on the Africapitalism implications for governance and how Africapitalism can help in addressing some of the challenges of corporate governance in countries such as Nigeria. The recent Skye –Polaris Bank scandal is yet another reminder of the state of corporate governance in Nigeria.

In the ‘International Business Review’ best research study for 2015, I highlighted the following as mainly responsible for the state of corporate governance in Nigeria. First, weak board governance – encompassing the lack of sufficient capability, independence and heterogeneity in board composition, bogus board reputation and non-robust board evaluation. Second, weak executive monitoring and accountability, due to poor disclosure, corrupt shareholder activism by shareholders’ associations and the lack of vibrant institutional shareholders. Third, corporate (private) corruption between the board and managers, including an opaque executive compensation culture. Fourth, public–private corruption, involving collaboration of regulators with corporations to circumvent regulatory provisions and perpetrate corruption. Nigeria may therefore lack the necessary quality in governance mechanisms to foster the implementation of Africapitalism, especially as it implies that for Africapitalism to succeed, there must be a supporting and reinforcing corporate governance system.

To address this lack of a corporate governance system that suits or accommodates Africapitalism, together with colleagues, we recently advanced an Africapitalist Corporate Governance Model (ACGM), in a 2018 book published by Cambridge University Press. In our model, we integrated Africapitalism principles (sense of parity and inclusion, sense of peace and belongingness, sense of peace and harmony, and sense of progress and prosperity) in a corporate governance framework oriented to create socio-economic prosperity. We noted that the lack of full and transparent disclosure by firms (one of the corporate governance problems highlighted earlier) signifies an attempt to conceal information, thereby making it difficult to determine if organisational benefits are distributed fairly. Bearing in mind that information enhances market efficiency, we argued that this problem is consistent with the need for a ‘sense of parity’, which demands that the benefits of progress and prosperity be equitably shared, and not lopsided. ACGM espouses a counter-current of progressivism, which appreciates that growth needs to be inclusive and transparently reported. In this case, any uneven distribution of social and financial wealth among stakeholders will not go undetected and unreported, which will then create some legitimacy pressures, subjecting corporations to new forms of societal expectations and control, an increasingly uncommon phenomenon in Nigeria’s dominant practice of unbridled capitalism.

Second, the rhetoric that Africa should and ought to solve Africa’s challenges is not just a fancy pan-African plot but indeed mirrors the realities of the terrain, especially as imported solutions have, in the main, led to poor transplantation and consequent absurd outcomes. In the book, we applied another cardinal value of Africapitalism into ACGM, which is the ‘sense of place and belongingness’, representing a direct reaction to globalised capitalism, and emphasising the importance of customising practices to address local realities. The conventional lack of recognition of the distinctiveness of the Nigerian institutional environment in corporate governance regulation only serves to intensify the problem by eroding of the economic value of ‘place’, culture, norms and values. Thus ACGM is locally adapted and as I argued in the 2015 article, even where you have foreign institutional investors, their contributions will only be effective only if their board member representatives possess substantial knowledge of the business terrain in Africa, in order to promote local content in their policies and operations. This can further be done through partnerships with local (African) institutional investors. However, the limited number of the latter need to be addressed through favourable government policies. For instance, Dangote Plc, through the recent state-of-the-art integrated cement plant in Masaiti district, Zambia, exemplifies the possibility for local investors to adopt ACGM, by providing a space for negotiation and dialogue in advancing socio-economic prosperity for place (homeland) and those who belong therein (Africans).

On board independence, we encouraged the need for more outside directors in our ACGM. We noted that outside board members will be more sensitive to society’s needs, thereby fostering a mutually beneficial co-existence between organisations and their environment. This will help to promote a ‘sense of peace and harmony’ through a stakeholder orientation rather than a shareholder-centric corporate governance structure and culture. Fourth, on the ‘sense of progress and prosperity’, ACGM allows the practise of a new model of capitalism, which balances profit concerns with social and environmental needs, thus benefiting shareholders and stakeholders alike.

Our ACGM idea opens the space for moving the Africapitalism momentum from its normative foundations to concretising its usability by firms in their governance, attempting to answer the ‘so what’ and the ‘how do I apply it’ questions managers and directors often have when they listen to us (and other advocates) speak about the philosophy. Africapitalism in practice. In other words, Africapitalism, as a management philosophy, needs a corporate governance framework to make it practicable, and while the Africapitalism principles will inform the corporate governance of the firm, the latter also presents the structure and expression for Africapitalism.

Finally, as context matters to both Africapitalism and corporate governance, ACGM encourages Africa’s capitalism to develop its own semantic universe, with its originality, departing from the colonial scholarly, practice and policy framing of development in Africa. To put in another way – our model advances how we are and ought to be rather than how to fit in.

Prof. Adegbite can be contacted via: emmanuel.adegbite@nottingham.ac.uk’