The relationship between corporate governance and performance of international non-governmental organizations in Somalia

Abstract

While insecurity and lack of basic skills are cited as some of the limitations affecting INGOs activities in Somalia; corporate governance is an important tool in management of INGOs and failure to implement it can affect their performance. Unilateral decision making, lack of transparency in audit and financial reports, incompetence and mismanagement are some of the problems that can arise without corporate governance and if they are not arrested they can have a negative impact on performance. This study sought to examine the relationship between corporate governance and performance of INGOs in Somalia. The objective of the study was to establish the corporate governance practices and their impact on performance. To achieve these objectives the study used a causal design study. The population of the study was obtained from a list of INGOs who were members of the Somalia NGO Consortium. Primary data was collected through a structured questionnaire that was administered to 58 INGOs. The study targeted members of board of directors and managers who were privy to the information as the respondents. The data obtained was analyzed using frequencies and regression analysis. The study established that the majority of the INGOs had implemented 4 corporate governance practices, board size and composition, board meetings, audit committee and transparency and disclosure. When regression analysis was conducted on each of the 4 corporate governance practices, separately, there was a positive relation with performance though insignificant. The study also found out that together the 4 corporate governance practices had a weak positive relationship with performance.