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Strong Corporate Governance Is Key To Attracting Foreign Investment Toward Emerging Markets Implementing a corporate governance framework will ensure accountability, help manage risk, facilitate strategic planning, and attract the potential foreign investment required to succeed in today's global economy.

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As the global economy continues to evolve, strong corporate governance is vital to attracting foreign investment toward emerging markets, and particularly, entrepreneurs and startup companies in the Middle East and North Africa region. While emerging markets are expected to grow at a rate of 4.2% in 2024, the lack of strong corporate governance remains a significant obstacle for foreign investors.

The UAE, especially, has made strides in recent years, particularly with its investment in telecommunications, transportation, logistics, and hospitality, but the demand from investors for responsible governance has also increased. Unfortunately, not all countries in the region are at the same level as the UAE. Countries such as Saudi Arabia, Egypt, and Morocco have significantly improved the protection of minority investors, a key component of corporate governance.

The regulators in countries in the GCC are operating to international standards and aligning with best practices in developed markets, resulting in high levels of compliance with boards of directors disclosing accurately and increased investment. But despite such improvements, boards of directors still need to work on technology, sustainability, risk management, and uncertainty. Technology is revolutionizing all sectors, and many businesses are leveraging technological advancements to improve efficiency and reduce costs. However, it has also been disruptive, especially for companies that need help to keep up with the vast changes and speed of development.

At the enterprise I lead, Hawkamah, we find that many boards struggling with technology, as well as lack of board diversity in terms of age, gender, and background. However, when it comes to technology, age diversity is vital, since the younger generation has a better understanding of technology and its role in developing the company. Boards throughout the region also report challenges with managing the high risk and uncertainty brought about by supply chain disruptions, the war between Russia and Ukraine, and high levels of global inflation. Additionally, understanding the meaning and importance of sustainability is also causing concern for boards.

Related: Three Reasons Why Your Startup Needs A Corporate Governance Playbook

Sustainability is a relatively new concept for the region, with regulators now asking companies to report and disclose sustainability strategies and their progress. For some boards, this is an area where they need expertise, guidance, and support, which is part of our role at Hawkamah. We at Hawkamah interact with boards across the region, delivering awareness sessions and training programs to equip them with the knowledge and skills to implement robust structures of corporate governance and sustainability strategies. Through awareness-raising and training programs, Hawkamah is helping to improve the quality of corporate practices in the region, generating greater investor confidence and driving economic growth.

At the end of the day, we encourage all companies operating in emerging markets to adopt and implement strong corporate governance practices. For entrepreneurs and startup companies in the region, implementing a corporate governance framework will ensure accountability, help manage risk, facilitate strategic planning, and attract the potential foreign investment required to succeed in today's global economy.

Related: How Succession Planning And Corporate Governance Will Ensure The Longevity Of UAE Family Businesses

Dr. Ashraf Gamal El Din, FC is the Chief Executive Officer of Hawkamah, the Institute for Corporate Governance, located in the Dubai international Financial Centre (DIFC). He is a Fellow and Certified Governance Expert from the Chartered Governance Institute, UK (ICSA). He was a jury member of the Arabia CSR Award.

Prior to joining Hawkamah, Dr. Ashraf was the Executive Chairman of Egypt Post. Before that, he was the Deputy Executive Director of the Egyptian Banking Institute, the training arm of the Central Bank of Egypt. He was also the founder and Project Manager of the Egyptian Corporate Responsibility Center working on promoting the concepts and application of SR in Egypt. Furthermore, he was the Executive Director of the Egyptian Institute of Directors (EloD), the Institute of Corporate Governance in Egypt and the Arab Region.

Dr. Ashraf has also served as a board member and head of the Audit Committee in several listed and non-listed state owned and family-owned companies, such as Egyptian Resorts Company, Sahl Hashish, Egypt Reinsurance, Misr Life Insurance, Suez Canal for Technology, Thebes International, Misr Qena Cement, just to name a few. He also served a member of the General Assembly of the Holding Company for Transportation.

Dr. Ashraf also served as an advisor to the Minister of Investment 2004-2010 in the areas of corporate governance, corporate social responsibility, privatization, and restructuring. Dr. Ashraf is a Professor of Management, Faculty of Commerce, Cairo University. He holds a PhD degree from Manchester University, UK, and a master’s degree in public administration from Carleton University, Canada. He further holds a bachelor’s degree in business administration from Cairo University with highest honors.

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