4 CORPORATE GOVERNANCE “Good corporate governance provides a level of disclosure and transparency regarding the conduct of corporations and their boards of directors that enables the supervision of their accountability while ensuring that they comply with their legal obligations and remissions, are accountable to shareholders and responsible to stakeholders including employees, suppliers, creditors, customers and communities, And act responsibly regarding the environment.“ (APRM Questionnaire, Section 3) 4.1 Overview 1. Good corporate governance has seven distinguishing characteristics: discipline, transparency, independence, accountability, responsibility, fairness, and social responsibility. These traits are important because they increase investor confidence, making it easier for corporations to raise equity capital and finance investment. Historically, Africa is a continent that has attracted very little investment. The hope is that improved corporate governance on the continent (especially in the context of wider economic and systemic governance) will enhance the confidence of investors both domestic and foreign. Furthermore, most economies in Africa rely on agriculture, mining and other extractive industries that have adverse effects on the environment. In addition, abject poverty, hunger and the scourge of pandemics such as HIV/Aids, malaria, and tuberculosis afflict many of our communities. This means that the concepts of corporate citizenship and corporate social responsibility need to be complied with to ensure not only that corporations manage the environment in a sustainable way, but also that they impact positively on the communities within which they operate. 2. For purposes of the self-assessment process, the APRM adopts the OECD's definition of corporate governance as a system by which corporations are directed, controlled, and held to account. This definition embraces all forms of enterprise in the private and public sectors, including public listed companies, private companies, state-owned enterprises, familyowned enterprises and small and medium enterprises (SMEs). However, in Africa, unlike in many developed countries, most of the commercial activity takes place outside the formal sector. In addition, not many African countries have a stock exchange and those that have report very few listed companies or activity. In order to remain relevant to the African context therefore, the APRM corporate 83