• Register
Majid Jafar, CEO of Crescent Petroleum.

Majid Jafar: Corporate governance is vital to long-term wellbeing of company

: Tuesday, November 26 - 2013 @ 12:26

Majid Jafar, CEO of Crescent Petroleum, the Middle East’s oldest private oil & gas company, and Vice-Chairman of the Crescent Group, which includes investments in logistics port management, infrastructure and private equity, highlighted the importance of high standards of corporate governance in the growth of the region’s companies and overall economic development while participating in the 7th Hawkamah MENA Corporate Governance conference.

The conference, which was held in Dubai on the 24th and 25th November 2013 at the Meydan Hotel by the Institute of Corporate Governance Hawkamah, and was opened by HE Sultan Al-Mansouri, UAE Minister of Economy and Chairman of the Securities and Commodities Authority (SCA), brought together business leaders, international experts, academics and regulators for discussions on the latest developments in international standards for corporate governance and to draw up recommendations for government regulators and the business community.

Joining co-panellists Mr. Osman Sultan, the CEO of DU Telecom and Mr. IyadMalas the CEO of Majid Al Futtaim Group on the opening panel discussion that explored the importance of corporate governance for leadership excellence, Mr. Jafar, who is also Managing Director of the Board of Dana Gas and an Accredited Director of the Institute of Directors (IoDMudara), highlighted the key importance of high standards of corporate governance in the growth of the region’s companies and overall economic development.

Highlighting the growing importance of the topic to businesses and investors in the region, Mr Jafar, commented, “Once viewed as little more than an exercise in public relations, today businesses throughout the region recognise that good corporate governance means strong management, a happy workforce, confident shareholders and robust financial health.”

Ten years ago, corporate governance was a new concept in the MENA region, but while some progress has been made already, a second wave now appears to be forming, and its results will depend largely on the capacity of national regulators to enforce existing corporate governance provision.

“More than ever, the Middle East’s business community understands that corporate governance is vital to the long-term wellbeing of a company, especially given the growth and rapid development of many sectors in this region”, he added. According to research by the Hawkamah Institute for Corporate Governance, 35% of listed companies in the MENA region do not yet have independent directors serving in their boards. And a survey of 12 private equity companies in the region found that bad corporate governance was generally considered a deal-breaker.

Enforcing it means recognising the benefits. In a wide-ranging discussion, Jafar touched on research conducted by McKinsey & Company, in cooperation with the World Bank, showing that investors are willing to pay a higher premium for companies with corporate governance practices versus those without such practices, and a recent IFC report, profiling successful corporate governance stories in the region which highlighted improving employee motivation, managing risk and managing growth as among the strongest success factors associated with strong corporate governance frameworks.

The news is not all negative at all, Jafar says. Overall, the benefits of good corporate governance are increasingly recognised in the region. In the past several years, at least four new institutes of corporate governance or institutes of directors have been established, demonstrating the growing demand for corporate governance information, training, and guidance for companies to improve their practices. Many countries — including Algeria, Egypt, Bahrain, Lebanon, Morocco, Oman, Tunisia, and of course the UAE — have issued new corporate governance codes.

According to Jafar, if the steady improvement in governance standards that the region has been witnessing is to continue, the active participation of investors in general and sovereign wealth funds in particular is needed. “A number of very encouraging advancements have been made, with some MENA countries having issued clear and effective codes and regulations, particularly in the areas of risk management, transparency and disclosure, and board practices.”

The issue now, however, is ensuring their implementation.

Today's Top Stories

Posted by

Tuesday, November 26- 2013 @ 12:26 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

AME Info Services



Business DirectoryVIEW ALL

Search by name

Search by industry

Browse alphabetically



JobsVIEW ALL

Search for jobs

Latest Jobs