African Union 5.1 Conceptual Framework The vision of NEPAD is to eradicate poverty and place African countries individually and collectively on the path to sustainable growth and development. This calls for sustainable production and creation of wealth through well-governed and competitive organisations whether they are in the private, public or not-for-profit sectors. In 2002, the African Union via NEPAD adopted the Declaration on Democracy, Political, Economic and Corporate Governance. This document includes a definition of corporate governance: „Corporate Governance is concerned with the ethical principles, values and practices that facilitate holding the balance between economic and social goals and between the individual and communal goals. The aim is to align as nearly as possible the interests of individuals, corporations and society within a framework of sound governance and common good.‟ This definition rejects the traditional „shareholder value approach‟ to corporate governance which is adopted in developed countries, such as the UK and the US, in favour of a „stakeholder inclusive‟ approach. This „stakeholder inclusive‟ approach has also been adopted by the King Reports in South Africa and the Malawi Code II. In the „stakeholder inclusive‟ approach: a. Boards should consider the legitimate interests and expectations of stakeholders on the basis that this is in the best interests of the organisation in the long-term, and not, as in the traditional „shareholder value‟ approach, merely as an instrument to serve the interests of shareholders, (maximisation of shareholder wealth and investor protection). b. Shareholders do not have any predetermined precedence over other stakeholders. The „best interests of the organisation‟ are defined not in terms of maximizing shareholder wealth and protecting investors, but within the parameters of the organisation as a sustainable enterprise and as a corporate citizen. c. Corporate social responsibility, environmental issues and ethics are, therefore, included within the definition of corporate governance rather than being complementary disciplines as in the „shareholder value approach‟. d. Corporate governance is also applied to all types of organisations whether they are in the private, public and not-for-profit sectors. Evidence is mounting that the adoption of good corporate practices across all three sectors (private, public and not-for-profit) combined with good governance in those other areas covered by the APRM leads to improved sustainable performance not just within the organisations but also for the country as a whole. This forms the rationale for the standards and codes and objectives adopted to guide corporate governance reform in Africa under the APRM. Good corporate governance has eight distinguishing characteristics: discipline, transparency, independence, accountability, responsibility, fairness, ethical conduct and good corporate citizenship. These traits are important because as they lead to better performing organisations which are sustainable in the long-term. This in turn leads to economic development as these organisations contribute more to the economy and to society as a whole directly through the wages, salaries and taxes they pay, and indirectly through the money they pay their supply chain, the vendors, retail outlets, service and training firms and resellers of their products and services. Good corporate governance should apply to all forms of organizations on the continent as many organisations in the public and not-for-profit sectors are the main economic, advocacy and service 44