Paul Muthaura reflects on the challenges that directors face today and his experience at the 2022 Salzburg Global Corporate Governance Forum
On October 13, Salzburg Global Seminar hosted its latest Corporate Governance Forum. This year, the theme was Global Disruption and Uncertain Horizons: How can Boards Navigate New Risks. The Forum participants examined the role directors play in addressing converging crises and debated their changing roles and responsibilities in today’s times of uncertainty.
Salzburg Global spoke with Paul Muthaura, chief executive of the Capital Markets Authority of Kenya, about his thoughts on the challenges that directors face today and his experience at the Forum.
Salzburg Global: What are the key challenges that directors face today?
Paul Muthaura: “I think for me it's deciding what's the right balance in terms of giving management room and overbearing on management. The whole concept of the board, especially in non-U.S. environments where you don't have a CEO chairman, ends up being significantly differentiated from the business.
“So then taking ownership of where they draw lines and what issues they push back on versus which issues they stand ably advised on, is very, very challenging. Especially when you get into the issues around ESG, where I really echo the sentiments that, if anything, the governance is the most important element in ESG in terms of making sure you have credible outcomes and deliverables on the environmental and the social and the board's responsibility in pushing for accountability and transparency that we have made great statements, but what progress have we actually made in delivering against those statements? And what's the non-spin statement of reality?
“As a business, you can always paint a pretty picture of what you're doing, but how often as a board are you having painful discussions on ‘really, where are we?’ and ‘really, is that the best we can do?’ And if we want to say we do more, what does that really mean?”
SG: What do you think is something that people in your industry don't talk about?
PM: “I think various, and right now I am doing a lot of consultancy, both looking at capital markets development and emerging capital markets on the continent in Africa. But at the same time, also having a lot of deliberations around making the net zero transition actually meaningful for Africa as a continent. I think too easily, there tends to be a sentiment that net zero is not our problem, because we're not emitters. And we have huge economic opportunities that need to be explored and that need to be created, for us to be forced to come to the table around net zero issues.
“But what I feel is the other side of that equation is, Africa, simply because it’s very low emissions, [with a] huge employment dimension, there's so many people able to be employed, and in large, very young people able to be employed. Add to that just the simple realities of the scale of the continent and the natural resources that are at our disposal. We have a huge opportunity to become fundamentally globally competitive, because you get to build the right sustainable infrastructure the right way, now.
“Right now there's a huge hole. There isn't infrastructure. But that means that building a carbon neutral, sustainable infrastructure is something that can be done now, and building in a manner that is really positioning for long term impact and transformation, in terms of the employment that can be created, very much the same way Southeast Asia really emerged as a global driver for cheap but quality labor. How does Africa become the fundamental center for sustainable sustainability? Because we have the capacity. But how are we actually turning that on? And focusing much less on waiting for the Global North to come and tell us what they want to do with us, but us saying ‘this is what we think are priorities’ and welcoming others to join our bandwagon. We need to set the direction. We need to take ownership of our future. And because of the simple realities, any right-minded person will jump on that bandwagon, if it is properly scoped and presented."
SG: What are you hoping to take away from this forum?
PM: “I'm a cross-over from the Finance Forum, so this is my first capital markets one. It is very much just appreciating getting perspective in terms of where other minds are at. What has thrown me a little, to be very honest, is that I'm the sole representative for a whole continent. So there is a bit of anxiety every time I speak, because who am I to represent a whole continent? And the risk of the comfort in saying, ‘well we listen to Paul, so we know where Africa is.’ It's not the case! I just have personal opinions. I have national opinions. At best I can speak relative to East Africa. But beyond that, I can't. I am the chair of an impact infrastructure commission for the continent, so there is engagement with people across the continent, but at the end of the day, regions need to be the ones to speak their truth, rather than a sole figurehead being said to speak for a whole continent.
“But the hope is, I can encourage more inclusion in attendances. And so that way, more decision makers can have the benefit of hearing a mix of perspectives and inputs, to really then translate into what they actually do, and what they actually drive in their environment."
