Ethiopian economy is at the stage of transformation. Reforms during the last couple of decades brought market economy, privatization and openings in the financial system to the Ethiopian economy. Investments and joint ventures with foreign investors are making progress. New corporations are created and growing. Export of new products beside the traditional exports of coffee and hides is rapidly increasing. There is an emerging trend in the financial system from the purely collateral based lending to performance based financing of businesses. All these indicate towards the emergence of new types of relations between and among businesses, investors, suppliers, and customers.
The main objective of the Ethiopian Growth and Transition Plan is to lay out the directions for accelerated, sustained and people-centered economic development. Such sustained economic growth is a necessary condition for reduction of poverty. The vision of the country is to build an economy, which has a modern and productive agricultural sector with enhanced technology and an industrial sector that plays a leading role in the economy.
The Ethiopian business sector will play a key role in achievement of these goals. Private companies, state owned enterprises and community-based business organizations need an enabling institutional environment in order to drive the economic development and to promote national progress.The new trends and changes in the Ethiopian economy and business environment need to be followed by major changes in the way of conducting business in the country. Good Corporate Governance in its broad sense will be essential.
Ownership and leadership by the business community for the development of Good Corporate Governance in Ethiopia is a fundamental condition for success. Key actors of the Ethiopian business community have realized this fact and have expressed their willingness and preparedness to play this role and to take its challenges.
Basic Principles and Values for Corporate Governance
In the Ethiopian National Development context Corporate Business shall stand on the fundaments of Basic Principles and Values. These Basic Principles for Ethiopian Business are:
Respect for Human Rights, Non-Discrimination and Commitment to Peaceful and Harmonious Development;
Obligation to the Democratic Values, Institutions and Laws;BR>
Commitment to Poverty Alleviation and Wealth Creation;BR>
Care for Environment and the Natural Resources of the Country;
On these Basic Principles the Business Community of Ethiopia is committed to Basic Values for Governance of their Corporations and Organizations. These Basic Values are:
Trustworthiness in all Business Relations;
Accountability to the Owners, Employees and Creditors;
Responsibility to Stakeholders and Society;
Integrity in all Business Undertakings;
Transparency in Communication and Publication;
Characteristics of the Ethiopian Code for Corporate Governance
The Ethiopian Code has been developed through an interactive and participatory process by the Stakeholders of the Ethiopian Business Community - private companies and corporations, state owned enterprises and utilities, government institutions, professional organizations and academia. The Stakeholders are committed to the process of implementation that would need creation of awareness, education and substantial structural changes in Ethiopian business traditions and culture.
The Ethiopian Code is built on international and regional experiences of similar Codes, taking into consideration the prevailing Ethiopian conditions. It is a voluntary Code, on the level of the internationally accepted and respected principles, standards and norms for Good Governance, promoting a gradual and transparent process of acceptance, capacity building and compliance.
The Ethiopian business community is dominated by small family-owned enterprises. Therefore, formal compliance with the Code is expected in the first hand by the bigger corporations and undertakings, however, all Ethiopian businesses independently of their ownership or size should be inspired and directed by the governance principles of the Code for a successful, business community- led development of the economy.
The Principles and Best Practices of Corporate Governance