Good corporate governance, for being a key driver of business performance, is not just an essential but a necessity for economic revival of the country and a major tool when it comes to attracting foreign investors. This was the upshot of the speeches delivered at a Corporate Governance Workshop for Small, Medium and Family Enterprises organised by the Lahore Chamber of Commerce and Industry (LCCI) in collaboration with International Finance Corporation (IFC) here on Thursday.
Issues came under discussion included: Why Corporate Governance Matters to SMEs, Governance of Family Owned Enterprises and Role of Women Entrepreneurs. There was a consensus among the speakers that the businesses need strive for implementation of sound corporate governance practices to improve performance individually and boost investors' confidence in a bid to improve the economy that has been facing multiple internal and external challenges.
They said corporate governance is also essential in ensuring transparency, strong and balanced economic development as well as in minimising wastages. "Corporate governance leads to a good flow of capital as well as minimises corruption, risks and mismanagement besides lowering capital costs. It is imperative in a growing economy like ours to boost investors' confidence and good corporate governance leads to greater confidence.'
"The companies that have good corporate governance structures always perform better than those that have weak governance structures. Every organisation should have structures that ensure safe growth and business failures were largely due to poor corporate governance structures.
Speaking on the occasion, LCCI President Farooq Iftikhar stressed the need for some modification in global Corporate governance model saying that it could not be same for all countries as ground realities and economic conditions are different in different countries.
Elaborating the point, he said that Pakistan has its own culture and traditions therefore family influence over business in this part of the land matters more than any country of the world. He said that the International Finance Corporation should prepare case studies for proper implementation of Corporate Governance in Pakistan.
He said like any developing economy, Pakistan also houses a large number of SMEs which not only employee major segment of workforce but also contribute to a great deal in GDP. Most of these SMEs are family owned enterprises and for that matter keeping in view the typical style of management adopted by Pakistani businessmen, the importance of learning about new concepts get manifold.
The LCCI President said that it is really significant to understand that the economy grows if SMEs grow. It is therefore vital that all stakeholders of the economy like government, banks, industry, business promotion bodies to collaborate with each other to ensure the growth and sustainability of SMEs.
LCCI Vice President Mian Abuzar Shad urged the women to take part in business activities as this would not only increase their exposure but would also empower them in many ways. He said that the LCCI appreciates the initiative taken by International Finance Corporation with an objective to raise awareness of good governance in SMEs and family-owned businesses in Pakistan.
The Convenor LCCI Standing Committee on Corporate Governance Altaf H Turab said that good Corporate Governance has emerged as a set of dynamic principles inevitable for developing an evil-free environment both vertically and horizontally for business proliferation. He said an ultimate objective of good corporate governance is to ensure an efficient management to safeguard the resources and minimise the risks for shareholders.
Altaf Turab said that Good Governance flourishes necessarily in a corruption-fee environment. On the other hand, poor governance is the most encouraging and breeding source of corruption and it disrupts the society's ideological characteristics. By establishing good governance practices, institutions are able to reduce conflicts, motivate employees to perform at higher levels and strengthen accountability mechanism thus stimulating the country's economic growth and ability to achieve profitability.
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