African multinationals bring home much more than profits
ing in a wide range of sectors. These included financial services, consumer goods, agriculture, consumer services, health care, natural resources, and information, communications and technology.
Of the 80 companies in our sample, approximately 19 percent were listed in Nigeria and elsewhere. Most of these cross-listed companies were listed on the London Stock Exchange (LSE) and Euronext Paris exchanges (26,5 percent each) as well as the NSX. Another 20 percent were also listed on the Johannesburg Stock Exchange. Others were also listed on the New York Stock Exchange, the Ghana Stock Exchange, the SIX Swiss Exchange, and the Frankfurt Stock Exchange.
The findings
Our study found that African multinational companies had higher standards of corporate governance than other local firms. They served as yardsticks for good corporate governance practices.
Internationalisation also helped African firms to disengage from home country shortcomings. These include corruption, tribalism and elitism. Elitism and tribalism, in this instance, refer to the appointment of directors on the basis of friendship or cronyism. These factors pose serious threats to the running and governance of companies in many African countries, including Nigeria.
These shortcomings, together with a widespread culture of patronage, have been cited as some of the biggest hindrances to Africa’s economic development.
Conclusion and implications There are two important implications of our study for policy makers and stakeholders of companies based in Africa and other emerging economies.
Firstly, African-based companies can enhance their reputation globally by listing their shares on overseas stock exchanges or appointing foreign directors onto their boards. Reputation is particularly important when a company seeks to enter foreign markets.
Lastly, multinational companies diffuse international best practices on corporate governance into their home markets. So, internationalisation can assist African companies to lessen the impact of local contextual challenges on their business and corporate governance practices. These include corruption, crony capitalism, and patronage and nepotism in corporate appointments. The Conversation Africa
◆ Danson Kimani, Lecturer in Accounting; CAGD coordinator at The Centre for Accountability and Global Development (CAGD), University of Essex ◆ Geofry Areneke, Senior lecturer in Accounting and Finance, Manchester Metropolitan University