Vice-President Dr Mohammed Gharib Bilal yesterday launched the Institute of Directors in Tanzania (IODT) and challenged it to come up with a good corporate governance code and practices within eighteen months.
Addressing the audience at the launch in Dar es Salaam, Dr Bilal said good corporate governance was a key component of economic growth in the country due to the fact that it ensured sustainable and risk-adjusted growth for both public and private enterprises.
The vice-president said corporate governance evolved over the past century to promote more effectively allocation of organizations’ resources “and therefore the nation’s savings” to its most productive uses.
“Many of the problems leading to our economic crises can be linked to poor corporate governance, with too many boards failing to meet their primary function of closely overseeing management,” he said, adding that most of them ended up risking by making decisions that focus on the short term.
According to Dr Bilal, the establishment of IODT in the country was meant to build the capacity of members by enhancing their understanding of best practices and responsibilities as board directors and in the conduct of the board business and governance. The vice president pointed out that the government was right in putting in place regulations to deal with good corporate governance.
He cited the Companies Act, 2002, the Accountants and Auditors Act, the Bank of Tanzania Act, the Financial Institutions Act and the Dar es Salaam Stock Exchange Act as regulators that had been performing well but stressed that directors were duty-bound to lead the organisations.
“There is a need, therefore, to institute directors' training programmes to enable them to meet high demand in this fast-changing business and economic environment,” he said.
IODT Board Chairman Pius Maneno said despite the establishment of the institution there were challenges relating to a code of conduct that needed to be abided by all directors in the country.
“We hope that something will change in coming years, when the community will want to see all directors subjected to this organ,” he added.