On the September 5, 2014, the Auditor General (AG) released a report he had conducted on the effectiveness of boards of directors in 13 state agencies for the period between July 1, 2011 and December 30, 2013.
In that report, the AG noted that 54 per cent of audited boards lacked approved strategic plans, 85 per cent operated without a risk management policy and 76.93 per cent had not conducted performance appraisals of their director generals/chief executive.
With regard to the general performance against their legal mandates, the AG noted that only two boards had fully implemented their mandate during the audited period; that apart from approving draft annual budget, less than 50 per cent of the boards had performed other cross-cutting responsibilities; and that none of the members of audited boards had participated in a formally organized continuing professional development programme.
Other issues that the AG noted include lack of performance assessments for some boards, their committees and individual board members; and inadequate remuneration of board members which ranged between Rwf50,000 and 60,000 per meeting depending on the member’s position at the board.
Being commissioned by the parliament itself, the above report probably prompted the enactment of the Public Institutions Act, 2016 to accommodate the recommendations therein advanced.
That Act repealed the one of 2009 which was silent about the BoD of public institutions, and the distinction between non-commercial institutions and state corporations.
Despite such improvements, the Act retained the powers to establish and dissolve public institutions in the hands of the parliament and indistinctively attributed the same responsibilities to their BoD, while their mandates would differ from institution to institution.
These two facts probably hindered the improvement of the BoD performance that was envisaged in enacting it.
In the pursuit of better governance of public institutions, parliament then passed a new Act which was promulgated on the June 8 2020 to extend powers and responsibilities of the BoD of state corporations, among other novelties.
For Instance, under the same Act, the BoDs of such corporations shall approve the organisational structure and determine the salaries and fringe benefits of the staff members, powers which were not accorded to the BoD under the previous Acts.
With regard to the appointment and removal of the executive or managing staffs, this new Act is not clear whether these ones will be appointed and removed by the BoD, but it stipulates that the state corporations shall be established and their staffs determined in accordance with the Companies Act.
Further, it states that apart from responsibilities enshrined in that very Act, other responsibilities of the BoD of a state corporations are determined in accordance with the Companies Act, which implies that like in privately owned corporations and according to the latter Act, the BoD of a state corporation remains responsible for acts performed by the Managing or Executive Directors as if they were performed by the BoD itself.
To stem bad governance, Public Account Committee should grill chairpersons of the BoDs before or instead of executive directors.
Jean Nepomuscene Mugengangabo is a corporate commercial lawyer, and a Partner at Landmark Advocates in Kigali