A posting earlier this week on the Business Ethics web site drew my attention to an article by Alissa Kolderstova on The Second Corporate Governance Wave in the Middle East and North Africa.
The article, published in the OECD Journal: Financial Market Trends, reviews the history of the relatively new concept of corporate governance in Arab countries. Her article identifies the first wave as the evolution in the last decade of governance structures and regulations, with Oman and Egypt developing corporate governance codes in 2002 and 2005. The second wave is a drive to assure enforcement of the laws which are on the books.
While most companies in the Middle East and North Africa (MENA) have traditionally relied on banks for capital, capital markets have begun to develop. What recent coups in the region may mean for continued development is unclear at this time.
The development of markets has forced what the author describes as a "disclosure-averse culture" toward greater transparency and stronger disclosures. Egypt has been at the forefront of countries in the region in adoption of strong governance princples. The recent turmoil and the continued regional instability will undoubtedly scare some foreign investors away, despite strong efforts by the government over the past decade to move toward more robust governance practices.