Compliance with Best Corporate Governance Practices by Local Authorities: An Empirical Analysis of Institutional and Operational Challenges

Abstract

This study identified and analyzed the key institutional and operational challenges faced by a selected local authority in Zimbabwe in ensuring corporate governance compliance. The Agency theory underpinned the current study.  Researchers applied a mixed methods research approach which used a structured questionnaire and a semi-structured interview guide to gather data from study participants within a selected Local authority in Zimbabwe. A cross-sectional survey design was used. The target population comprised 260 employees from the selected Local Authority's various departments. A sample of 155 employees was selected using the Krejcie and Morgan formula, whilst six (6) interviews with key informants were conducted, guided by the saturation principle. The findings show that institutional challenges, including weak and fragmented governance frameworks, poorly composed and politicized boards, and inadequate enforcement mechanisms, significantly undermine compliance. Meanwhile, operational challenges such as limited human capital resources, limited financial resources, poor financial disclosure, and poor grievance handling procedures cripples the day to day implementation of best corporate governance practices.  As such, the study recommended that there should be mechanisms for strong enforcement of regular compliance audit, stiffer penalties for corporate governance breaches and strict monitoring and evaluation by the Corporate Governance Unit in the office of the President and Cabinet. Local Authorities must also invest in training and development for their board members and other employees to improve their understanding of corporate governance principles and corporate ethics.