Effectiveness, efficiency, ethic, leadership, time management, risk management, strategy, compliance were words repeated during a two-day training hosted by the National Insurance Corporation of Eritrea (NICE) at the Asmara Palace Hotel on October 16th and 17th. As NICE has a regulatory body, after many years, regulators and NICE came up with suggestions to organise an induction in corporate governance as the company has to meet the compliance of regulators.
NICE, through this training wanted to include other companies as there are on their way to create an efficient board structure as some haven’t held any annual general meetings yet for instance and to put the standards high while this workshop will stimulate the appetite of other companies.
Thus, during the two-day workshop entitled ‘Board Induction: Good Governance, Risk Management and Strategy’, the aim was to train professionals from different companies of the country and sensitise on the importance of having board of directors, the role, aim and responsibility it requires.
Sunday morning, Mr. Girmai Ghebremeskel, Chairman of NICE, opened the training by giving his welcoming speech to participants. He explained how the board induction program is crucial and necessary for members to be comfortable with corporate governance, risk management and strategy. As such, having strong knowledge in this area will enable board members “to meet challenges effectively and deliver while winning the trust of shareholders”, he stressed. Mr. Zeru Woldemichael, Managing Director/ CEO of NICE, also addressed the audience by introducing Mrs. Hope Murera, a lawyer by profession and actual General Manager of a COMESA institution named Zep. Re Company, abbreviated from the French ‘Zone d’Échange Préférentielle’, a PTA regional re-insurance company.
Mr. Woldemichael also explained how this induction is the opportunity to share best practices and it can apply to any company. In doing so, groups such as Red Sea Bottlers, Eritrean Development and Investment Bank, Eri-Tel Shared Company, regulators of the Bank of Eritrea, Housing and Commerce Bank, Audit Services Corporation, University of Asmara and the Ministry of Finance were among the participants.
Despite being Sunday morning, all stakeholders called present. Mrs. Murera opened the session by firstly introducing herself as a Rwandan, she was involved in corporate re-inventing after she fought the genocide in 1994. The aim was to follow the vision of development Rwanda wanted and what Rwanda can earn through corporate governance. “It is, hence, important to see what best practices could fit for each country specifics”, she explained.
This board induction is the “first of its kind in Eritrea and surely it is a step forward for the country”, said Mr. Henok Nugusse, Department Head of Banking and Finance at Halhale College. In fact, with a main focus on corporate governance, risk management and strategy, the workshop gave extensive insight and a platform to discuss issues that are critical for the success of a company.
The training started lively with a discussion on the understanding of corporate governance and its differences with corporate management. Hands raised, ideas flowing onto the floor. In fact, there are processes, procedures to meet requirements of corporate governance, in other words, an organization has responsibility towards governance, and it is the highest level, the rules and regulations and legal aspect to comply, through set of conduct to implement. The corporate has responsibility towards its shareholders, employees and the government. This ethical leadership is key in corporate governance, which comprised of an independent board from the management team. To strengthen this, the board of directors is the body of elected or appointed members who oversee the activities of a company or organization and acts as intermediary between investors and management.
Hence, the board will appoint management to manage day to day activities of the company and is accountable to investors on wellbeing of the company.
Many comments were raised on the question of separating the position between CEO and chairperson of a board of directors as well as the importance for any newly appointed board member to have strong knowledge of the structure and vision of the company prior accepting the position. Under the same topic, participants were then invited to watch a video on the third largest bank in the U.S., Wells Fargo, and its corporate governance failure. This video highlighted the question of: Who is responsible? In other words, besides the fact that a CEO and a chairman has to be two separate positions, the board of directors has the ultimate responsibility, Mrs. Murera explained. It is also important to distinguish board versus management and avoiding the conflict of interests that could be raised. Auditing is also key here, having both an external and internal audit will be synonym of best practice.
In terms of effectiveness and efficiency, one of the topic raised was in terms of risk management and strategy. Mrs. Murera explained that the level of effectiveness of the board will depend on how much it focuses on strategic issues as it has to look at big decisions that have significant impact on the company as well as a long-term vision. This part of the induction was particularly interesting to participants carefully listening to the do’s and don’ts in terms of strategy. Mrs. Murera clarified in detail the importance of having a strategic planning team within a company and how risk management and strategy are interrelated. “Strategy, thus, is dynamic, is the direction, the allocation of resources, the objectives, the milestones and reporting for each milestone”, she continued. This interesting part of the workshop is significant to enable Eritrean companies to understand the need for a dynamic strategy in which its execution should amounts for 80% and 20% in planning. Many participants then raised the issue of the lack of competition as in the case of NICE or Red Sea Bottlers in Eritrea. However, drawing a strategy is an approach of always being ready and compete with ourselves, the presenter wonderfully expressed; “a golfer competes against himself”.
Putting a system in place to use time effectively is clearly primordial in any corporations. Furthermore, among the top of the discussions was the question of succession plan, the McKinsey 7S strategic framework and the combination of both hard and soft elements in terms of values and principles, rewarding people and the need to include young generation especially in terms of technology, innovation and creativity. In line with this, the question of talent management as one of the board focus was also enhanced during the two-day workshop.
Surely, the induction illustrated clear interests from all participants. NICE, as an example of corporate governance, managed to bring on the table high-level professionals from different corporations and share best practices while looking at case studies from respective companies. Mrs. Murera was impressed by the level of participation:
NICE has done a great job in terms of corporate governance and the idea was to share with other board members, other industries, what are the experiences and sharing best practices…We discuss issues that should be of concern to the board and lead to a healthy organisation and society. I was very excited by the contribution from the floor and understanding of the responsibility of the board in terms of corporate governance.
Certainly, the great participation throughout the two-day long workshop was impressive and highlighted the commitment towards best practices by major corporations in Eritrea. Undoubtedly, challenges remain in terms of talent management, moving from a traditional board towards a more effective and efficient modern board of directors will also need to look at other tools for success. Indeed, with solely one woman participating from the Eri-Tel group and three young professionals among the audience could not go unnoticed. Here are Mrs. Murera’s comments:
Gender and age groups are very misrepresented, I’m an activist around that. It does produce better result to have diverse age and gender included, it’s a homework, I would like to see something different in the next few years.
As raised above, the questions of succession plan and talent management go in hands with the promotion of young professionals and bridging the gap within the workplace. For such reasons, I was more interested in listening to the views of two young professionals. Mr. Henok Nugusse, Department Head of Banking and Finance at the Halhale Collge of Business and Economics and Mr. Alexander Zemichael, legal adviser at NICE and currently the risk and compliance officer and sits as secretary of the board.
Some thoughts by Mr. Henok Nugusse:
This training will help a lot in institutionalising corporation, and have a proper know-how of this different aspect of corporate governance, governance is the key to success as well as failure of a company. It helps the board a lot to have a very efficient and effective way in designing their strategy. This kind of training adds value and in attaining objective to corporation on the way towards success.
I was looking forward to this induction, corporate governance is one subject taught in my department for fourth year students and I know the theoretical part but to be exposed to the practical one is like learning from twenty years of experiences from our mentors. We were the only young people, it was a privilege to sit besides our mentors and learn a lot from them. I appreciate what NICE is doing and I particularly want to thank Mr. Zeru Woldemichael for inviting us.
Planning and organizing such kind of training should be followed by other companies in the country, it’s the first of its kind and would love to see other companies follow the exemplary lead of NICE, to have a chance to attend such trainings, as NICE already invite us to participate to Annual General Meeting and we bring students on board too. It is a motivational tool and exposure to the real world…Those students have the innovative idea, the critical thinking, and the creativity and be exposed to the reality and by synchronising the two will bring better outputs and results.
As the country suffers in terms of human resources scarcity, initiatives to overcome it is primordial.
Let’s see what Mr. Alexander Zemichael has to say:
The board must set aside and look at the long term, survival and success of the company. In terms of succession plan, there is an ad hoc committee to oversee the succession policy of NICE. It actually encourages you to learn, most of the young professionals have been to Mauritius, India, South Africa among others. The need for exposure is important in any businesses, we have the Charter Insurance Institute examination to go through and NICE covers it, it’s a way to work in regards to succession plan.
I am also a lecturer at the Law School in Asmara, and I am teaching insurance law. We are trying to create an awareness and a platform to show people and get their interests in insurance business, my aim when teaching is to share my passion and load them with knowledge as we have lack of human resources. Most people are employees but not scholars, we need more educated people, more youth able to analyse and not just doing clerical duties.
Mr. Henok Nugusse furhter highlighted some important points:
To feel the gap of human resources scarcity, to synchronise both practices and theories are primordial.
The gender and age ratio is among the issues raised in terms of succession and talent management. Young blooded people need mentors, and mentors need fast blooded people.
You get the wisdom from the turtle and the speed from the rabbit, you synchronise it as you can’t isolate the one from the other.
There is a need for an initiative from the higher level and to consider such issues when organising such induction, it is about considering them… It doesn’t mean that there are not there but to create a platform to let run equally with you. Our mentors should not be afraid of us because sooner or later is the youth who would take over, so the way they mentor you will be responsible for the outcomes of tomorrow, the future of the person, the society, the nation. I strongly recommend to take upon initiatives, steps, innovative thinking and transfer wisdom from them, we are ready to accept them. The two sides of the coin shouldn’t be split up at all time.
The board induction concluded with success and certificate handlings. This well-organized and effective training will surely direct corporations in Eritrea towards best practices, effectiveness and compliances by including key values and ethical leadership within a forward-looking board.