Wednesday, September 1, 2010

Hard economic facts are too bitter for the common people

"AMRA ato kichu bujhi tujhi na! Amago dorkar kom damer mota chal ar dal." (We do not understand much. What we need are cheap coarse rice and pulse). This is not a demand. It is an urgent appeal to the government from our common people. They can't wait long for buying commodities under open market sales (OMS). Otherwise, they have to leave their work or will have to keep themselves waiting in the OMS line, whenever the circumstances demand that. Is our government concerned about it?

Our poor and lower middle class people don't know whether there is an increase of price in the world market. The UN Secretary General has demonstrated his keenness to set a task force to examine the reasons behind price-hike all over the world and to find its remedy as soon as possible. Besides, several social organisations have already started to discuss about it but still now no effective outcome is seen.

About 40 per cent of the country's population are now categorised as poor, according to official statistics. The rate of poverty has gone up and a larger section is starving as prices of essentials have increased by 150 to 200 per cent and their income rose only by 5.0 per cent.

Interestingly, the prices of essentials that are mainly consumed by the poor, increased more. Therefore, measures must be taken to help lower the prices of the essentials because there is no possibility of quick wage-hike. It is really difficult to tackle poverty-related problems unless we are able to reduce the growing disparity between the rich and the poor. According to our point of view based on the observation of the current situation, it is a nightmare experience for us to satisfy our demand practically. One cannot do good work on the basis of such information.

The complexity and intensity of the problems are not actually presented before the nation. Then how, we, the general people will appreciate the real state of affairs relating to the latest situation concerning our economy. As far as we are concerned, agricultural production and the use of land and water are among the biggest challenges for Bangladesh. But still we are at a long distance from really meeting this challenge.

The government should formulate a comprehensive land use policy and a water management plan and check population growth. It also should take the issues of climate change and food security very seriously and act accordingly. The government should take measures to stop arbitrary use of land for constructing houses, structures or roads and seek out ways to increase agricultural production with reduced use of fertilisers.

The development projects, therefore, must be socially acceptable, economically efficient and environmentally sustainable. Land degradation in the country has become a very important issue because excessive use of chemical fertilisers is causing serious degradation of land. We must make ourselves aware of the technologies and the up-to-date knowledge on the system of production.

The common properties of the country are heavily misused and the practice must be stopped for future production. Recently, this writer kept his eyes on a private television channel and found that a ceramic manufacturing company is capturing the agricultural land to enhance its production. The rivers which flow beside those ceramic factories are also polluted. It is a matter of shame that once upon a time Bangladesh was known to be a country of rivers but nowadays rivers are drastically polluted and we as well as our government are acting as a blind-folded authority. Our rivers are seriously polluted and the problem demands immediate attention of the authorities.

We may ignore river pollution or environmental pollution problem here. But we should not forget that everything is inter-linked in an overlapping manner. We feel ourselves ashamed when we see that our government is presenting absurd reports and inconsistent statistics to the people of Bangladesh. Youth unemployment rate is much more than 13 per cent as claimed by the government. The statistics showing only one out of 1,000 people in urban areas drinking polluted water is also not correct. Despite the central bank's tight monetary policy, inflation rate has continued to increase. The government has missed both the inflation targets set under the Poverty Reduction Strategy Paper (PRSP) and also by the Bangladesh Bank (BB). The PRSP envisaged 6.0 per cent inflation rate while the BB set it at 7.0 per cent. But the actual rate of inflation was higher during the last two fiscal years and still continues to remain at a high level. Depreciation of taka against dollar, fuel price-hike and increase in government borrowing resulted in the non-food inflation hike.

We think that the government should work hard for smooth agricultural production to halt further rise of inflation rates. The credit control mechanism did not work for curbing inflation as both public and private sector credits increased. The Bangladesh Bank in its monetary policy statement released a few months ago said external trade is steadily drawing domestic consumer prices closer to global prices. Growing export of perishable goods such as vegetables and fish is pitching their domestic prices towards the higher export prices. It is also said that higher import prices of major production inputs have cumulated to a sustained upward pressure on domestic consumer prices, despite partial shielding of pass-through of higher oil prices.

Our common people are unable to realise what the actual change in domestic inflation rate is or what the related global prices are. They want to live their life as best as they can afford. But everything that is happening in front of our open eyes is largely against the interest of the poor and common people of our country. A Bangladesh Bank official had earlier said that demand for, and supply of, essential commodities had faced a setback earlier due to the joint forces' indiscriminate drives against hoarding, resulting in continuous hike of food prices. Such unsystematic drives may cause shortage of commodities resulting in commodity price-hike. During the last one year, prices of wheat, soyabean oil, onion etc., were particularly under severe upward pressures, hitting the poor and the common people below the belt.

We are now in the depth of an uncertainty about the state of our future economy. Sources in banking sector say there is at present no scarcity in production of commodities in the country and imports are also adequate. However, the market realities are still different for most of us. And the predictions by various quarters about the overall economic situation are different and, at times, conflicting, too.

Our government is apparently trying its best to address the economic problems. It had earlier introduced fair price shops. That partly helped lower the prices of essentials, except that of edible oil. Does the government know, how many such shops were providing lower quality foods such as rice, oils, onions etc.. It was seen that one of our ex-Food Ministers was standing in a queue in front of a fair price shop in the capital city and she then complained that it was quite unfair for the poor people to experience the odds in such shops.

The sky-rocketing food prices all over the world was earlier an alarming development for countries like Bangladesh. The repeated strikes of natural calamities also destroyed our farm products. This interim government, due to its relative inexperience, did not address the urgent issues in time or it spent its energy and resources on unnecessary agendas. Suggestions came from different quarters for encouraging our people to eat potatoes because of bumper production. But we think that if 150 million people start eating potatoes three times a day, then our potatoes will be out of stock within a week. We must be practical in our approach to addressing the problems that vitally affect the interests of the common people. We must not plead for impractical things.

Bangladesh desperately needs to devise sustainable means to tackle its food security needs to build a buffer stock of agro-essentials and fertilisers. The vulnerable group food assistance programme must be strengthened; food for work, VGF programs must also be continued. The government, now or in the future, will have to follow a pragmatic policy that should be framed on the basis of "open-minded" discussions with all the stakeholders. Energy, food and other issues of critical importance are too serious matters that cannot be dealt with, in a casual manner. It is not easy to manage the pressing socio-economic issues of Bangladesh in an amateurish way.

NGOs must consider their capacity to manage microfinance programmes

NON-governmental organisations (NGOs) must consider their capacity to manage microfinance programmes. The widespread poverty, with all the problems that come with it, is the greatest challenge of our time. Traditional aid has not helped in solving the problems. One kind of development activity, which promotes financial sustainability for the individual as well as for society, is micro finance (MF). But even micro finance institutions or MFIs, are often dependent on financial support.

Have microcredit programmes generated positive results for the poor and poor women in particular? While answering this particular question, we should say that numerous studies and evaluations have demonstrated a rise in incomes and other indicators of standard of living from microcredit programs. A large number of these programmes have focused on supporting women, who bear the brunt of poverty and have been left out of most poverty reduction programmes in the past. Under many programmes, women make up as many as 90 per cent of borrowers. Lending to women is also assumed to result in a greater multiplier effect because women pass on the benefits to children, through increased spending on the household, education and nutrition.

In many cases, microcredit has contributed to changes in attitude about women's contribution to, and role in, economic and social development. Specifically, microcredit has resulted in increased recognition of women's productive role. Earning our own money allows us to do what we want with it. It also brings us 'izzat' honour or respect because the money proves our contribution. Otherwise, we work like animals, we are never given credit for our contribution and even our own men say that we do not work. When we have our own money we are no longer 'mohtaj' (dependent to the point of being at the other person's mercy. The word is often used for the physically disabled)." (The quotation here is from a Pakistani entrepreneur, in Nighat Said Khan, 1984).

Whether or not they are poor, women may take advantage of their newfound financial independence to assert themselves, stand up to abusive spouses or serve as role models in the community.

Another burning question is that why do not the poorest women and men participate in microcredit programs? There are several reasons why the poor do not participate in microcredit programmes. The leading cause is self-exclusion. The poorest, especially the poorest women, often lack confidence, skills, and market contacts. They consider themselves unable to repay debt. This may be particularly relevant to women, who may have limited control over the revenues used for repayment. Some analysts refer to the poorest as "debt-averse." One might also say they have more to lose if their investment doesn't pan out. Some women do not join due to social sanctions which restrict their mobility (Hashemi in Wood and Sharif, 1997).

Even where targeting is highly effective, self-selection appears to be the leading reason why the ultra-poor are excluded from microcredit programmes.

Studies on women's control of credit in Bangladesh indicate that most women borrowers have only partial control over loans, or have relinquished all control to male members of the family. Moreover, women with greater control over loans tend to be those engaged in traditional home-based activities (Goetz and Gupta, 1994). The majority of microcredit is used to finance livelihood (survival) activities such as trading (e.g., vegetable vending) and food processing (e.g., paddy husking). These activities are more opportunistic than entrepreneurial and carry a lower risk of generating negative results (such as increased indebtedness, increased vulnerability).

However, returns on labour tend to be low, and possibilities to expand income beyond marginal increases (i.e. in the medium and long term) are minimal. Survival activities offer only limited potential for significant and sustained increases in income. There is a qualitative difference in the "entrepreneurial" businesses.

All economies rely upon the financial intermediary function to transfer resources from savers to investors. In market economies, this function is performed by commercial banks and the capital markets. The poor would borrow relatively small amounts, and the processing and supervision of lending to them would consume administrative costs that would be disproportionate to the amount of lending. The absence of commercial banks has led to non-conventional forms of lending. The recent prominence given to microcredit owes much to the success of a relatively few microcredit programmes and their increasing scale. The Grameen Bank of Bangladesh, the most prominent of the successes, now reaches over 2.0 million people, with cumulative lending of about $2.1 billion. Similar successful examples are known in Latin America (e.g., Banco Solidario in Bolivia) and less so in Africa (the Kenya Rural Enterprise Programme is a good example). Progress has also been recorded in several transition economies, mixed in some cases. Such institutions have not only achieved a degree of success, but they have also managed to attract donor support and press attention.

Pioneered by Grameen Bank, micro-credit has proved to be an exceptionally effective tool for poverty alleviation and approach to development. The Grameen Bank model of credit delivery to the rural poor - especially women - has proved that the poor can lift themselves out of poverty through their own efforts and industry provided they are given access to capital. By 2006, nearly 80 per cent of poor households have taken part in micro-credit programmes, and a majority of those have improved their economic condition. The micro-finance sector is set to push boundaries further with the development of micro-insurance schemes.

Developing countries could benefit by instituting similar comprehensive programmes, eventually involving the private sector and, where applicable, efficient NGOs. The United Nations could provide more robust technical assistance programmes in that direction. A crucial part of any future effort should be to strengthen the administrative structures of existing microcredit institutions proliferate. It is possible that economies of scale are important in micro lending. Dynamic leadership and paid management staff are probably crucial. The provision of information on available services to the poor is particularly essential. This is not at present the case, even in some advanced developing countries. Information on services for the poor is rarely made readily available.

Microcredit, however, is not a panacea. Realising its limitations, some organisations have already begun to develop new programmes and approaches to reach those presently excluded by microcredit programmes. In some areas, another way to increase the incomes of the poor and promote gender equity is to support labour movements where the poor, and poor women in particular, are involved in new economic sectors. Due to liberalised trade and rapid economic growth in many Asian economies, low-paying employment and piece-rate work in and around free trade zones is increasing rapidly, often with mixed consequences, especially for women. In many contexts, organising women to bargain for fair wages, benefits and working conditions is an appropriate intervention to fight poverty and promote gender equity.

Finally, it is important to acknowledge that microcredit may not be the appropriate intervention in all cases. If very few programs have actually helped the poorest of the poor, is this due to program failure, or because credit is not always the most appropriate approach to supporting the efforts of the poor? As one researcher noted, microfinance institutions' apparent "failure" to reach the poor may not be a failure at all, "but rather, a realisation that microcredit is not the way out of poverty for all the poor." (Zaman1997, 253).

Is micro-credit a tool for sustainable development and poverty alleviation?

THERE is no reputable statistical evidence to date to show that micro-credit works for reducing poverty or enhancing social contribution by the poorest section of the population.

Does it move people permanently across the "poverty line"? No, again because no evidence to say it does or can. Do the micro-loans go to tiny businesses and do those businesses grow? Again the answer would be mostly no. There is no solid data to disprove this.

Around 2.7 billion of people in countries across the globe are considered to be living in poverty, according to statistics from the United Nations Development Program (UNDP). These people have a consumption level of less than US$ 2.0 per day. Extreme poverty is defined as living in less than $1.0 per day. Around 1.1 billion of the poor live in different countries are in extreme poverty. People living in extreme poverty often lack in opportunities to have their basic needs met, meaning access to food, clean water, clothes and decent shelter. Most lack education and are vulnerable to diseases. Most of the poor are also exposed to political, juridical or social injustices and have little or no power to make their own choices or form their own life situation.

One important aspect of poverty is that it is women, to a significantly higher degree than men. Seventy per cent of those living in extreme poverty are women. Women are illiterate to a higher extent, are more exposed to malnutrition and diseases and lack social, political and economic rights in many places.

Nevertheless, women take a bigger responsibility for providing for the family and usually work harder than men.

The essence of poverty is the combination of lack of power and choice and lack of material resources. People living in poverty are not only lacking in, material resources, but also in, freedom to decide over and shape their own lives. Poverty deprives them of the opportunity to choose on matters of fundamental importance to themselves. Poverty affects not only individuals but also groups, societies and nations. The problem is widespread and very dynamic and the patterns of poverty change over time. The democratic or human rights aspect of poverty interacts with the material dimension, since lack of power and choice often makes it difficult for the poor to obtain adequate material resources.

The problem is context-specific; poverty is unique in each place, with different political, economic, environmental and socio cultural situations. There are many different manifestations of poverty - hunger, poor health, premature death, ignorance, discrimination and insecurity, denial of dignity and social status. Poverty is by the United Nations Development Programme (UNDP) defined as living on a consumption level less than $ 2.0 per day.

Now the question is about sustainability. What is the meaning of sustainability? Within the micro finance sector, the concept of "sustainability" refers to economic sustainability. There are two ways to define sustainability. The first definition is operational sustainability, which means that income (from lending rates, fees and other incomes from the clients) cover all operational current costs (administration, credit losses, salaries, capital costs). The other definition is financial sustainability. According to this definition, the organisation has reached a position where incomes not only cover current costs, but also build up the own capital. The greater part of the micro finance institutions (MFIs) is operationally sustainable - incomes cover costs for current operations - but the organisations are not strong enough to finance further expansion. However, a financially sustainable organisation has an income structure that is strong enough to make further expansion possible, without support from external sources. When impact on gender equity is considered, income is only a part of the equation.

First of all, women's aim is seldom limited to increasing income. In addition, other changes, such as enhancing women's visibility and enabling them to voice their concerns, may be a key means to achieve long-term impact on efforts for raising women's status and improving gender equity. The impact of microcredit alone on women's status and gender equity is limited. Most women borrowers have only partial control over loans, or have relinquished all control to male members of the family. This has serious implications for the impact of gender equity. However, this is not to say benefits are non-existent. As part of a broader effort to raise awareness and mobilise women, credit could play an important role as an "entry point" to strengthen women'snetworks and mobility, increase their knowledge and self-confidence, and increase their status in the family.

Microcredit has proven its potential to generate results. However, these results are generally short-term and vary significantly among borrowers. In general, the poorest seldom benefit from microcredit, while the middle and upper poor benefit the most. Women in particular face significant barriers to achieving sustained increases in income and improving their status, and require complementary support in other areas such as training, marketing, literacy, social mobilisation, and other financial services (e.g., consumption loans, savings). In fact, it is difficult to separate the impact of microcredit from that of other interventions. One of the problems with most development works targeting the poor in least developed or low income countries is dependency on aid. For decades, countries in the western world have been supporting the poor countries, through money, education, technical back-up, knowledge, democracy building and so on. However, a number of problems are connected to this sort of development work. Many of such countries struggle with huge foreign debts, high inflation, political instability, ethnic conflicts, corruption, weak institutions and low education level. Most of them are dependent on a few raw materials for export, and are seriously affected by trade barriers from the western markets. Despite good intentions, aid is not the solution to the poor's problems. Dependency on aid is, in the long run, counteracting development. The incentive to work for change disappears when a situation of dependency is formed. Many donors are getting tired of giving, because of lack of results. A dependency situation does not benefit either party in the long run. It is, therefore, necessary to find ways for sustainable development of poor countries, without financial support.

The topic of micro finance has received extra attention lately, since UN declared 2005 to be the International Year of Micro Credit. This correlates well with the Millennium Development Goals (MDGs), where one of the goals is to decrease by 50 % the proportion of people living in extreme poverty by 2015.

Micro credit is a very important tool to help people out of poverty in many countries around the world. It is important to get a deeper understanding for the transition process to sustainability for the banks, since this, in the long run, is the best way for all parties. The poorest 10-15 per cent of the population are largely excluded from microcredit programs. Financial data is not directly related to results. Sound financial management and the success of borrowers' businesses are crucial to achieving results. However, there is no direct correlation between repayment and business success, and even less of a link between repayment and social and gender impact.

Participatory appraisal may have an important contribution to make to improved monitoring of the impact of microcredit on women's empowerment.

Re-shaping corporate governance: A momentous responsibility for government

COPYRIGHT, interestingly, is often interpreted as a right to copy by Bangladeshis. Let me elaborate. Most Dhallywood movies are in effect Bollywood hits remade, with a mother or sister character added to indigenize the same. Scrape them a little, compare them a bit or even give them a cursory glance, and you would know instantly what I mean. This is not restricted to the world of cinema. In fact, most of our well researched, extensively debated and heavily studied' reports of some of the high-power committees appointed by our government are not original works. Bluntly put, they are adopted, or adapted, from reports on the same subject already published in other countries, mostly the Western ones.

By now one can safely argue that there is a complete grammar, a well-defined code, for adopting such committee reports in Bangladesh. This practice of somehow willingly becoming a carbon copy or rubber stamp of others has been our Achilles' heel since Independence. This has only been accentuated in the post-liberalisation era. No wonder, in the past fifteen years, for every report of the government that has gone on to shape and de-shape the economic policy formulations of Bangladesh one can readily trace its origins to an authentic source abroad. The capital adequacy norms, the competition law and the accounting standards belong to this genre.

The concept of 'Corporate Governance' is an innovative idea in the current business perspective which is the after-effect of de-shapes of economicpolicy. It is such an idea that has traditionally been associated with the "principal-agent" or "agency" problem. A "principal-agent" relationship arises when the person who owns a firm is not the same as the person who manages or controls it. Consequently, while we proceeded to 'adopt' the idea we failed to internally debate the various models that would be suitable to the Bangladesh business environment. Neither did we bother to observe the external debate world over on the various models of corporate governance.

Like most things in life, issues arising in the field of corporate governance boil down to a set of questions about relationships. For all the current debate about whether 'corporate governance' refers solely to matters affecting the structure and composition of boards of directors or a broader range of issues relating to the framework within which corporate policy is made and articulated, there is no escaping the fact that we are discussing a series of arrangements contrived by and for human beings. When it comes to the nature, form and functions of a corporation, nothing is given. Everything is a matter of choice. All is open to criticism and justification. As such, there is a critical ethical dimension to the debate - which, inevitably, forces us to consider the nature, quality and extent of the underlying relationships on which the corporation is founded.

Indeed, this is in line with the definition of corporate governance offered by Monks and Minow (1995, p. 1). In answering the question, "what is corporate governance?", they reply; "It is the relationship among various participants in determining the direction and performance of corporations". This may seem to be a fairly obvious point to labour. However, most of the discussion about corporate governance seems to ignore the implications of this simple observation. Specifically, advocates of various regimes for corporate governance are silent about an absolutely fundamental question; namely, "What (if anything) is the basic nature of humanity?"

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. It is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organisation through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis shareholders' welfare. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labour (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.

Nevertheless "corporate governance", despite some feeble attempts from various quarters, remains an ambiguous and often misunderstood phrase. For quite some time it was confined only to corporate management. That is not so. It is something much broader, for it must include a fair, efficient and transparent administration and strive to meet certain well defined, written objectives. Corporate governance must go well beyond law. The quantity, quality and frequency of financial and managerial disclosure, the degree and extent to which the Board of Director (BOD) exercise their trustee responsibilities (largely an ethical commitment), and the commitment to run a transparent organisation -- these should be constantly evolving due to interplay of many factors and the roles played by the more progressive/responsible elements within the corporate sector.

The role of corporate by and large has been understood in terms of a commercial business paradigm of thinking that focuses purely on economic parameters of success. As corporates have been regarded as institutions that cater to the market demand by providing products and services, and have the onus for creating wealth and jobs, their market position has traditionally been a function of financial performance and profitability. However, over the past few years, as a consequence of rising globalization and pressing ecological issues, the perception of the role of corporate in the broader societal context within which it operates, has been altered. But legitimacy is the thing which comes when Corporate Governance is discussed. To talk of education (as opposed to indoctrination) is to allow room for consideration of the interests of those being educated. Thus, in this environment, there will be a legitimate expectation that adherence to best practice in corporate governance will be of benefit to each of the parties bound into the relevant relationships.

These benefits may be of two types. Some will be 'intrinsic' benefits - such as when things are done for their own sake. These might include reforms in relations between stakeholders based on respect for the inherent dignity of persons. For example, board functions designed to ensure that accounts are 'true and fair' (compelling concepts despite their official demise), would just as likely be based on a belief that lying and deceit are an affront to the dignity of persons, as a desire to ensure technical accuracy as a way of securing market approval or avoiding punishment.

Then there are 'extrinsic' benefits -- goods that flow from an action and which are external to the deed. For example, returning a lost wallet in order to secure a financial reward is to act in order to receive an extrinsic benefit. As indicated above, a decision to determine the quality of annual accountsaccording to the likelihood of earning praise from the market or regulator would be to act in the expectation of extrinsic benefits. In such circumstances, all manner of wrongs can be committed by otherwise decent people who have suspended their judgments in deference to the authorities.

Today, about 300 multinationals control 25% of the world's assets. Bangladeshi companies currently comprise only a fraction of this number. However, with our economy coming of age, more and more of them will lay claim to this elite list. While this is truly a matter of great pride, we must remember that there rests an equally momentous responsibility on us to give back to the society that has nurtured our growth. Today, most companies contribute to society by means of well-defined corporate citizenship initiatives executed by their not-for-profit trusts and foundations. However, I believe it is important for corporations to look beyond charity and redefine the act of 'giving back'. Corporations must look at cultivating and encouraging social entrepreneurship in society with the same degree of focus and energy that keeps profitable businesses running. What are we to make of this discussion? As a first point, it should be noted that it is extremely unlikely that any explicit view of human nature is informing the process of developing policies that provide the framework within which corporate governance occurs.

Such a view persists -- even in circumstances where the initiative has been launched with the best and most positive of intentions. Turning around such perceptions is a major challenge, not just for companies but also for the whole community. We cannot afford to have developments, designed to foster best practice, being labeled in predominantly negative terms.

This is no more so than in the field of ethics. The grounds for serious concern already lie in the frequency with which the topic of 'ethics' is linked to programmes of fraud prevention and control. While it is true that a healthy, ethical culture will reduce the incidence of fraud and also lower the costs of compliance, it is a grave error to think that this necessitates the type of specific link that is currently in vogue in all too many organisations.

A proper concern about ethics is of importance for far more pressing reasons. Not least of these is the fact that a decision to include the ethical dimension, as an explicit element in the daily management environment, is a commitment to ensure that the organisation is equipped to handle new issues arising in a rapidly changing world. How might this be done? One suggestion is to amend the Corporations Law so that courts can take into account the extent to which corporations have instituted best practice in corporate governance (in its broad construction) when sentencing those that have been found guilty of an offence. Companies are still held accountable for their actions. However, the Govt. recognises that even, with the best intentions, things can go wrong. In these cases due weight is given to the effort made by the corporation. As such, the community sees the responsibility is properly apportioned, while shareholders and other stakeholders with a financial interest in the company are 'rewarded' for their efforts aimed at preventing wrong-doing. Under such a scheme, bodies like the Securities & Exchange Commission (SEC), National Board of Revenue (NBR), Finance Ministry, Planning Commission and other respective regulatory bodies are responsible for monitoring and investigating breaches of the regulations and would continue to recommend prosecutions. Self-regulatory organisations would then be responsible for providing support services to companies inclined to engage in best practice in this area. The final leg of the tripod would be the auditing firms which would be required to conduct independent audits of each company's framework for compliance. Unlike normal financial or risk audit, the necessary audit would have to take into account measures designed to strengthen the ethical culture of the organisation.

Those blessed with a sharp eye for an apparent contradiction may be ready to pounce on this latest turn in this argument. It could be objected that a legislative response, such as that proposed above, would reinforce a tendency for organisations to shape their behaviour in response to external stimuli. After all, is there much difference between engaging in compliant behaviour through fear of punishment and the alternative, of engaging in positive behaviour in hope of a reduced punishment - if something should go wrong? However, the force of the objection can be nullified by being clear about that which is to be specified as best practice in corporate governance. It should be stressed that participation in these arrangements would be entirely voluntary. Companies feeling sufficiently confident about the efficacy of their own programmes could choose not to be audited. This would generate a saving in expenditure but at the price of taking on extra risk if something should go wrong.

Govt. can take a legislative solution that is specifically designed to encourage a form of education such that companies will naturally come to avoid some or all of the excessive behaviour that occurs in lightly regulated markets when largely populated by selfish egoists. Should the government consider adopting such a recommendation, it would be combining a concern for the ethics of the market place with that of promoting economic hygiene. As in public health campaigns, prevention would be better than cure. Needless to say, a great number of practical souls will be wondering about the detail of a programme designed to deliver the kind of results that I envisage. Those of a more skeptical bent may even doubt that such a programme can be devised.

The thing needed in today's conditions is an organisation that can efficiently and effectively govern itself with a fair measure of self-regulation in which individuals take personal responsibility for applying the corporation's 'ethical compass'. This then allows flexible responses to changing conditions - but with well-defined cultural boundaries based on a clearly articulated ethical framework that is consistently applied across every part of the organisation. Beyond this, it is highly undesirable that an ethical culture be built on negative sentiment - such as the need to have a defense should the issue of criminal responsibility ever arise. The thing needed is a positive commitment to a set of core values and principles that help the organisation to answer the questions, "Who are we? What do we stand for?"

Unfortunately, the task of creating such a culture is not a matter of applying a 'quick fix'. However, there is no mystery to be found in the process for developing a robust ethical environment in corporations. Indeed, there is a growing range of people able to offer practical assistance based on extensive experience. Of course, it is possible to motivate people with 'fear of the lash'. However, it is only unhealthy cultures that tend to emerge from such conditions. The real prize is to be had by those who offer the promise of a positive workplace in which people can make meaning as they pursue that part of their life based around work.

Yet, this idea of corporate governance was celebrated as the most original idea in our reforms process by finance professionals, chartered accountants and the company secretaries. In the process we never debated it origins, potency or efficacy in the Bangladeshi context. Sadly, the very idea was marketed as 'professional opportunities' by various professional bodies. It would thus be difficult even to point out three genuine differences between the committee report that went on to prescribe the code for corporate governance in Bangladesh and the original report on corporate governance in the United States (the Cadbury Report).