Cairo - Although he rejects the idea that good corporate governance would have decreased the effect of the global financial crisis, Martin Steindl, of the International Finance Corporation (IFC), believes that better corporate governance would have saved some companies from being part of the crisis.

"Such a crisis affects everyone, but when it comes to getting up again, better corporate governance will play a role," says Steindl, who is Programme Manager in Corporate Governance Advisory Services for the Middle East and North Africa (MENA) region, at the IFC. The IFC is part of the World Bank group.

While board directors, shareholders and stakeholders worldwide are struggling with the economic slowdown and falling stock markets, Steindl urges businesses to follow good practices of corporate governance.

Although a difficult concept to define precisely, the term corporate governance is now widely taken to involve standards of accountability, transparency and ethical conduct in business.

Steindl argues that companies with good corporate governance will be the first to see their share prices pick up again.

"As an investor looking at companies, it will definitely make a difference when a company's information is displayed where everybody can see," Steindl told Deutsche Presse-Agentur dpa.

A recent survey by the IFC and Hawkama, a Gulf-based organization that promotes corporate governance in the region, shows that the MENA region is struggling with applying corporate governance.

The survey, to be released every two years, places Saudi Arabia in the first place, where companies and banks surveyed met an average of 17 best practice indicators, putting the Kingdom in the "improved practice" category.

Egypt follows in the "emerging practice" category with 15 indicators met, while the rest of the 11 countries surveyed average between
13 and 14 indicators.

While 76 per cent of listed companies and 67 per cent of listed banks cite corporate governance as being important for their businesses, more than 50 per cent of respondents could not define it, confusing the term with corporate social responsibility.

"I remember very well at the beginning when I said 'I have a corporate governance project', people responded 'government?'. People are aware of the concept now and this is good," said Steindl.

One of the characteristics of good corporate governance is female representation on the board of any company. A vast majority of banks (78 per cent) stated that they do not have a single female director, while only one per cent answered they had more than one.

While some stop to look twice at this condition, it is no feminist one. Steindl says that gender diversity helps in the decision making process.

"Involving women and men in the decision-making would, in most cases, lead to the better decisions. This is something that works in the northern European countries, where it is compulsory to have a certain percentage of women on the board and they claimed it leads to tremendous success.

"It is also bizarre when you find companies that produce goods for women, fashion for example, and on the board level we have found only men," Steindl said.

Nonetheless, Steindl looks at the bigger picture and says that the biggest challenge facing MENA countries is "implementation".

"This is why we try to work predominantly with directors. They need to be convinced with the concept and see it as a culture. If they just see this as a compliance, which many people do, or as something to help in marketing, then you know that these companies are not necessarily prepared for any kind of crisis," says Steindl.

The Cairo-based regional branch of the IFC organizes awareness- raising events, helps companies to better apply corporate governance and had helped establishing several institutes of directors in the MENA region.

Steindl argues that implementation of good corporate governance is a worldwide challenge, especially in the West where "some companies do not abide by their own rules".

"The only difference between the West and East is that the West has better understood how to show that they have good corporate governance practices, but unfortunately that does not mean that they really have a good grasp of it," Steindl said. (dpa)