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The New Times (Kigali)
One of the things holding back the progress of local farmers is the over dependence on rainfall and the vulnerability to climate shocks. This makes agricultural production unpredictable.
For instance, last year alone 9,412 hectares of crops were destroyed by disasters while some 797 deaths of livestock were recorded. This reflects a sharp rise compared to 2017 when 5,111 hectares of crops were destroyed and 589 livestock deaths recorded.
It is such risks that banks have persistently cited while making the case for not lending money to the agriculture sector.
To put things into perspective, last year the agriculture sector received a paltry 1.2 per cent of the total commercial bank loans despite the fact that it employs more than 70 per cent of the country’s labour force and contributes 30 per cent of the Gross Domestic Product (GDP).
Commerce, restaurants and hotels remains the leading sector with a share of 34.5 per cent of total loans, followed by public works and building which received 26.2 per cent and transport, warehouse and communication at 14.6 per cent.
The government has responded. On Tuesday next week it will launch the long-anticipated agriculture insurance scheme
This offers hope. The scheme has the potential to bring peace of mind to livestock and crop farmers, whose fields are entirely rain fed.
If well managed, the scheme should be able to de-risk the agriculture sector and encourage banks to start lending money to farmers in order help them recapitalise their farms, apply modern farming methods such as irrigation schemes and cold rooms.
The scheme is subsidised by government to a tune of 40 per cent of the total cost.
However, clear terms between all parties should be designed if the scheme is to win the much-needed trust of farmers and lenders. This would guarantee its survival.
The New Times (Kigali)
By: Mike Eldon
I was recently invited by the accountants’ body, the Institute of Certified Public Accountants of Kenya (ICPAK) to run a session at their 7th Annual Governance and Ethics Conference.
The topic they chose for me was “Inside the boardroom: the realities of shareholder engagement”, and this in the context of the overall theme of the event, “Sustainability and Convergence”.
I felt challenged by the title thrown at me, and I was happy to accept for an extra reason: I am the chairman of the council of KCA University, and since ICPAK is our sponsor I would be addressing my shareholders, the institute’s members.
In preparing the presentation my mind first took me to the two key words in the theme, and I began with “convergence”.
For in whatever I do, whether as a director or a consultant, I am always focused on convergence, on helping to bring people together, aligning their energy by building healthy cultures.
As for “sustainability”, in today’s world we are increasingly conscious of the need to think beyond the next quarter, the next year, to longer term sustainability. This inevitably requires organisations of every kind (not just the giants) to be sensitive to shareholders yes, but now more than ever to all key stakeholders.
I could readily see why the two words were chosen together, for surely unless there is convergence between stakeholders – among whom the shareholders – you can forget about sustainability.
So here was my launch platform. I would elaborate on how to bring about convergence, this in support of sustainability, and then explore the engagement of shareholders in such a context.
Within the context, my terms of reference clearly specified that I had to discuss how this should unfold in the boardroom.
Did this make my task easier or more difficult? In the boardroom, shareholders are represented by the directors they appoint at their Annual General Meetings. Such representatives sit alongside independent (typically non-executive) directors, and executive directors (those who participate in the organisation’s management).
But in the boardroom good governance allows no room for differentiation of perspectives, however much the actual realities may differ.
Each and every director must only be concerned with the best interests of the organisation. They all strive to add value as best as they can with that one unified objective, and none among them is more or less important or influential.
So where does engagement with directors who represent shareholders come in? Why must they be singled out for special attention?
It is because their principals, as Roger Hitchcock of the Sirdar Group expressed it to me in the context of private companies, are “legitimately selfish” in their objective of seeing some combination of dividends and growth.
Yet when these directors enter the boardroom they are obliged to become, like any other director, “legally selfless”.
Much comes down to how a chairperson engages those at the table. In those boardrooms, is their leader talented at converging fellow directors around building sustainability?
Does that leader know how to engage the “legitimately selfish” outside that room so they focus only on becoming the “legally selfless” within it?
Take the example of a board agenda item, again in the context of a for-profit company, to decide on how much of a dividend to pay.
Directors representing shareholders may be inclined to press for higher amounts, but they must not succumb to such temptations if it is other than in the interest of the company.
If higher disbursement will starve the organisation of needed capital then sustainability will be compromised.
So the mature, responsible shareholder-elected person in the room will go for gratification-deferral, in support of future benefit.
I am happy to report that I duly performed at the conference, in front of around two hundred of KCA University’s shareholders.
I laid out my thoughts on convergence and sustainability, taking time to review how what is discussed at board meetings will support these two key pillars of governance and ethics.
You’ll have to ask those present how well I engaged them on the subject. But alongside addressing my theme, I can confess that I did take advantage of this unusual opportunity to enhance shareholder engagement with the university.