Corporate Governance in the MENA Region – Attitudes and Perceptions


Corporate Governance in the MENA Region - Attitudes and Perceptions Ethical BoardroomBy Fause Antelo Ersheid – Senior Corporate Governance Analyst & Researcher at the Abu Dhabi Center for Corporate Governance (ADCCG). Abu Dhabi – UAE





Corporate Governance fervor was gaining ground in the Middle East and North Africa (MENA) region ever since the turn of the Century. All states in the region had embraced corporate governance in some shape or another. Governments across the region adopted corporate governance in an effort to draw foreign direct investments, enhance international competitiveness and investment climate, as well as develop their capital markets. Some states had formalised corporate governance codes, while others have corporate governance articles impeded in the Company Law.

Consultants and major regional and international think tanks were heavily involved at the time and provided the much needed assistance in the process of implementation. One of the major obstacles that they accepted to deal with early on was selling the community on why the country called for corporate governance and why companies in particular needed to adopt it. Long and tedious efforts of sporadic awareness campaigns took place across the region with the guidance of major international think tanks such as the IFC and OECD. To date, almost, all listed companies in major stock markets in the region are in compliance with regulatory requirements, although compliance is not mandatory in all countries.

Corporate governance was received in a number of ways in the Mena region. At the official level, corporate governance was well-received and governments put in place the proper legal infrastructure to foster its efficacious implementation, as described earlier. Support from country leaderships created  momentum and set the right tone to advance corporate governance initiatives. Moreover, the official government seal facilitated the proliferation of corporate governance codes across sectors and industries as corporate governance codes were developed for listed and non-listed companies, government owned enterprises and across industries including banking, real estate and insurance, among others.


“Investors in the region are by and large not appreciative of corporate governance. It is clear that corporate governance is not factored into their investment decisions”


Companies’ attitudes towards corporate governance, on the other hand, shaped a fusion of polarised attitudes. On the one side of the spectrum, a select number of companies put their full faith behind corporate governance and used a proactive approach to fully implement it in their organisations. Not just that, they have leaped beyond local legal requirements and ventured into international best practices. Such approach had proved to be very rewarding as companies have been viewed as champions of corporate governance in the region and their efforts were documented in many articles and case studies and highlighted as well in regional and international conferences.

Along the other end of the spectrum, one can find a skeptical attitude towards governance. More specifically, companies which are required to comply with corporate governance codes, but showed a serious lack of conviction in corporate governance and considered compliance with its rules as just another imposed legal burden. In general, these types of companies seem to be in compliance, but its adoption of corporate governance was rather superficial and merely attempts to meet the legal requirements.

Government owned enterprises (SOEs) are indeed very concerned and curious about corporate governance. Some countries have drafted formal codes of corporate governance for SOEs while others have followed a random approach whereby individual government entities applied corporate governance based on best international practices. In general, SOE corporate governance in the MENA region requires more coordination between different government systems as well as formalisation and the unification of codes within the same country.

Generally, non-listed companies are extremely hesitant to adopt corporate governance codes for it usually involves allocating more capital for the implementing of governance schemes. Family businesses, in particular, are increasingly embracing corporate governance, although the first generation was very skeptical about it. The second and third generations had been showing more interest in formal corporate governance that goes beyond secession planning to incorporate corporate governance into its strategy, responsibilities and processes.

Investors in the region are by and large not appreciative of corporate governance. It is clear that corporate governance is not factored into their investment decisions. This, in turn, sustained a negative effect on the evolution of corporate governance in the region as companies were not driven by its shareholders to adopt good governance practices.

Creditors, including banks and other financial firms do not consider corporate governance variables when studying a company’s loan application. This, also hampered the progressiveness of corporate governance in the region.

In summary, corporate governance in the MENA region is still in the development stage. The official attitude is positive and upbeat; companies, however, exhibited mixed results with a select number adopting a strategic approach to corporate governance while the great majority is merely complying with codes and showing utter lack of enthusiasm. Family businesses were the most resilient to adopt corporate governance in the near past, but are now increasingly embracing corporate governance. Investors and creditors as well do not factor in corporate governance in their investment decisions. That said, the overall picture of corporate governance in the MENA region is positive and it will find its path towards broad appeal and full strategic implementation amongst the business community in the near future.


About the Author

Economist, corporate governance analyst and a researcher (with over 15 years of experience) who’s passionately curious about corporate social responsibility (CSR), ethics and sustainability issues. Fause holds three academic degrees from the University of Miami: BA (Economics and Marketing), MA (Economics) and MBA (Corporate Finance and Investments) and is a regular speaker at local and regional economic and business focused conferences.

During the early years of his career, he was centered on economic research and analysis and hence managed to publish a number of papers in the areas of banking, national accounts, capital markets, labor economic, knowledge economy, macroeconomics, public finance, youth employment etc.

In 2008, Fause decided to commit to business sustainability aspects, mainly corporate governance and to raising awareness about transparency, the importance of providing timely and accurate disclosure, protecting shareholders’ rights and being accountable, amongst other things. During various roles at the Abu Dhabi Center for Corporate Governance, he has carried out corporate governance framework assessments and corporate governance gap analysis, advised  high profile clients (public, and private sectors) on strategic corporate governance issues related to their company and reviewed local codes of corporate governance.

For more information on corporate governance and sustainability issues in the MENA region, Fause can be contacted by


Attribution – photo by Larry Johnson on Flickr