By Joan Akello
Having a chairperson who sits on numerous boards might not be illegal, but is it smart?
Company name: National Insurance Corporation. Board chairman: Dr. Martin Jerome Okech Aliker. Company name: Uganda Clays Ltd. Board Chairman: Dr. Martin Aliker. Company name: Junior Achievements Ltd. Board Chairman: Dr.Aliker. Company name: New Forests Ltd. Director: Dr.Aliker. And the list goes on. Why is this jolly senior citizen so popular on the boards of many leading companies in Uganda?Aliker says even he does not know.
“You never apply and you do not even know which company is looking for you,” Aliker, the retired dentist, politician, and socialite, says, “It is somebody who knows somebody who knows somebody who knows you and presents your name to the board.”
That networking has ensured that Aliker has sat on over 40 boards of directors since his first appointment in 1961. He currently sits on eight boards. His first was as director of Uganda Breweries Limited where, he says, he was introduced by Sir Michael Blundell, then-managing director of the company. He retired from this board after 43 years of service in 2001, the same year he was appointed director at Nation Media Group, chairman of Monitor Newspaper and Publications and that of the Credit Reference Bureau of the Uganda central bank. Aliker is on the Actis East African Advisory Board, the chairman of the Board of Trustees of the Makerere University Endowment Fund, and a Senior Presidential Advisor of President Yoweri Museveni.
Elly Karuhanga; the current chairman of Uganda Chamber of Mines and Petroleum, is another A’ class corporation board favourite. The lawyer and politician currently chairman of the Development Finance Co. of Uganda Ltd (DFCU) Bank board, is a director in many others including Bankom Uganda, Nile Breweries (SABMiller), Chobe Safari Lodge, Paraa Safari Lodge, Equatorial Teak Company and Mweya Safari Lodge. He retired last year as President and Director of Tullow Uganda Operations Pty Ltd and Senior Adviser, Africa, for Tullow Oil.
Close on the heels of these is Charles Mbire who is board Chairman of the Uganda Securities Exchange (USE), MTN Uganda, Eskom Uganda Limited, and a director of Rift Valley Railways (RVR) among others.
Other board favourites are former ministry of Finance permanent secretary, Christopher M. Kassami who sits on the Bank of Uganda Board and is board chairman of (Bharti) Airtel Uganda, Simba Group boss Patrick Bitature, Hannington R. Karuhanga of Savannah Commodities Ltd, Juma Kisaame of DFCU, and Japheth Kato, former CEO of the Capital Markets Authority(CMA).
Top female directors are few and include Angela Kanyima Kiryabwire and Prof. Mary Okwakol who Chair Uganda National Roads Authority (UNRA) and Uganda National Examinations Board (UNEB) boards respectively, Barbara Mulwana, Winifred Tarinyeba-Kiryabwire, a Lecturer at Makerere University’s School of Law who is director of DFCU and Dr. Maggie Kigozi, the former Uganda Investment Authority executive director. Among others, Kigozi sits on the Mulago Hospital and National Forestry Authority (NFA) boards.
Those are the men and women on the boards of some of the top corporate entities. But every company in Uganda, both public and private, is by law required to have a minimum of two directors to be registered, according to the Uganda companies Act, Cap.110. In most cases, a quick survey reveals, the same individuals are named on many boards; big and small, public and private. This practice is completely within the law. But it, perhaps, needs to be changed.
The law and the reality
Kigozi says even when one has great skills and levels of expertise; one should not chair more than two boards.
Currently, the number of directorships tenable in Uganda is unlimited. Some companies; in their Memorandum and Articles of Association, may place limits. The CMA has a limit of not more than five directorships and two chairmanships for listed companies. Experts believe there is need to develop a model of board role performance in Uganda. That is the position of Stephen Korutaro Nkundabanyanga, an associate professor at Makerere University Business School and Prof. Augustine Ahiauzu of the Centre for Management Research and Training of Nigeria. The two have studied Ugandan boards extensively.
They say the potential ineffectiveness of a director involved on several boards simultaneously and the potential created for conflicting situations and competing interests can negate benefits of board role performance.Nabeeta Karanzi Soteri, the acting Executive Director of Management Training and Advisory Centre (MTAC), says sitting on several boards should not be a problem. The question of numbers is not a problem but one’s availability, interest, dedication, commitment to the organisation and appreciation of the purpose of the organisation’s existence. He says the only danger is to be on boards of competing organisations.
“This will raise conflict of interest issues and it is best you do not find yourself on such boards,” says Soteri.
The strategic direction of an organisation is a replica of the interests of the board members and the clashes Soteri mentions are not surprising, particularly in the public entities. Managers and boards sometimes clash publicly. A famous case is that of UNEB where then-board chairman Fagil Mandy `retired’ the body’s executive secretary but he refused to budge and was eventually reinstated by President Museveni. The same case happened at the National Social Security Fund where the board let go of the Managing Director, Richard Byarugaba, but the President reinstated him.Soteri’s conclusion: “There has to be an end to how many boards one should sit after all government prohibits one person from sitting on more than two boards.” In Aliker’s case, he is chairing or has chaired more than two boards at the same time at one point in the past 54 years.
Changing role of boards
Charles Ocici who is the Executive Director of Enterprise Uganda says, if not properly selected, a board with people who sit on many boards or are “fresh” can cripple the institution.
“They (directors) will not have gone to add value but will use their power to confuse, fail to see distinction between management and the board and will begin to meddle in management issues of the institution,” he says. Still, he prefers an open policy.Ocici says the more somebody is appointed to sit on different boards, the more it indicates that they have maturity in leadership and governance. It is all about one’s connections and reputation. Ocici says such people are busy and are not looking for jobs.“Their time is precious and many companies struggle to get the same person as this person gets selected routinely, they get better,” says Ocici.
Boards are part of corporate governance. Most Ugandan companies follow the unitary model where the boards monitor the company’s management and must be independent. Ideally, board members not only interact with management but also interact with the rest of staff and; periodically get performance updates from the management. Members should follow through previous meetings and be in the know of what is happening and not just become active during meetings.
Board members are expected to carry out research, provide technical guidance to managers where need arises, take decisions of a policy nature to achieve company objectives and goals, and also to oversee strategic planning. Their main role is to recruit the managing director or chief executive officer, check management, set up mechanisms to enable management to operate and policies to be followed and implemented.
The ideal board has between seven to ten members with people who have experience in company or related organisations. They usually have specific qualifications in financial and human resource management, strategic planning. But sometimes private sector entities appoint ‘fixers’; people who can give them assurance of protection of their investments by the government – in especially in risky sectors such as electricity distribution.
In some cases, especially in public enterprises, the board appointments are political. Members are selected for their political correctness, or to score political mileage. The appointing authority may want to appease a certain religious, tribal group or region. Sometimes those appointed are friends of the appointing authority; a minister or ministry officials.
Aliker says it is very tricky when politicians are appointed on boards especially in the private sector; they are both a liability and asset depending on the prevailing political tide. Ocici adds that political appointees should follow the private sector criteria and value addition, look beyond scoring political points, and focus on service delivery. He says the same people should not be recycled or political failures appointed.
Political appointees can also be problematic because they are sometimes treated as no more than the fulfilment of requirements of the law. The problem is worsened because the Uganda Companies Act is silent on how to ensure performance of the duties for which such board members are required on a company. The board is usually even permitted under the Articles of Association to delegate power to committees which exercise powers as may be required by the board. So board appointees pick the perks but effectively do no work.
Gerald Ssendaula, who is a politician and former minister of Finance, is the current board chairman of Uganda Revenue Authority and Tropical Bank and non- executive member of power distributor; Umeme,He says these days, the parent Ministry of the public entity notifies cabinet of its intention to appoint a new board for a given institution and each minister is given room to propose members. The final list is presented to the President and later to the Parliamentary Appointments Committee for vetting. Ssendaula who held various ministerial portfolios; of Trade and Cooperatives, Natural Resources and Finance says he is among those sought after due to exposure in government and public service. He says his banking background and the role he played in cleaning up the tax body in the past as minister of Finance possibly easily made him a good pick to chair the URA board.
Generally, Kigozi believes, people like her sit on such boards because they have skills and networks that companies and institutions need. She has worked with several government institutions.“I have expertise in investment promotion and policy advocacy which companies need. I know most company MDs and management which is useful while seeking suppliers and consumers.”Ocici cites the late James Mulwana, founder on the Mulwana Group of Companies, to argue the same point. Ocici says at the time of his death in 2013, Mulwana was sitting on many boards including that of the Private Sector Foundation Uganda, Eskom Uganda Limited, East Africa Development Bank Ltd, Advisory Committee of the East African Business Council, Zain Uganda and British American Tobacco Uganda, and the International Finance Corporation Business Advisory Council in Washington D.C., among others.
“The late Mulwana was such a darling; companies wanted him to chair boards where the owners or members were PhD holders. They were not bothered about his education or academic background but what one has done somewhere else,” Ocici says.But being on many boards is not an endless soirée in posh offices and conference rooms. It can get grueling and might involve one’s private life and lifestyle coming under scrutiny, says Aliker. “Your personal behaviour reflects on the company,” he says.One must, therefore, be at their best behaviour or bring ridicule or embarrassment to the company in dealings with junior staff and colleagues on the board, and eating and drinking habits.
“Companies want people who will make it perform better, generate profits and thrive and therefore will not entertain such people,” Aliker says. Aliker is a passionate buyer of shares in blue chip companies; including banks, insurance firms, manufacturing plants and media houses.But his background is different. He holds a Bachelor of Arts degree in Political Science from North western University; USA and a Doctor of Dental Surgery (DDS) from the same university. He is a Fellow of the Royal College of Surgeons (FRCS) awarded by the Royal College of Surgeons of England.
He attributes his popularity to, over time, learning how boards work and how to treat other members. He says this makes work easy. Currently he is contemplating retirement when Uganda Clays Ltd, of which he is board chairman, declares its first dividend.