Governing Institutions Where the Rulebook Doesn’t Quite Fit

There is a persistent assumption in international governance circles: that good governance is essentially a universal standard, waiting to be applied. Get the right board composition. Separate the roles of Chair and CEO. Establish independent committees. Follow the codes. Done.

It is a reasonable framework — for markets where institutions, legal systems, and capital structures operate in reasonably predictable ways. But we live in an increasingly VUCA world. What happens when a financial institution operates in a region with shallow domestic capital markets, persistent regulatory ambiguity, a currency under chronic pressure, and a population that is overwhelmingly unbanked? What does good governance actually look like then — not on paper, but in practice?

I have been sitting with this question wearing different hats: as Chair of a systemically important bank in a frontier market, as Chair of a private-sector-led financial inclusion consortium, and as a practitioner who has worked alongside development finance institutions assessing governance from the outside. The conditions differ. The question is the same: how do you maintain institutional integrity and strategic direction in environments where the rules are still being written, the infrastructure is incomplete, and the expectations of international partners frequently diverge from local operational reality?

What I have come to believe is this: imported governance frameworks are necessary but insufficient. Frontier market governance requires something harder to codify – adaptive judgment at the board level, operating in the space between international standards and local necessity. And underneath that judgment, holding it together, is something governance codes almost never mention: culture. And service.

The Conformance-Governance Confusion

In a 2023 discussion on compliance and governance in fintech and frontier markets — with practitioners including Julia Chin and others working at the intersection of regulatory design and institutional development — we examined a pattern that repeats itself across immature financial institutions: technically compliant structures whose boards exercise no real oversight authority. The paperwork is in order. The independent directors are appointed. The committees meet quarterly. And yet, when a crisis arises — a currency shock, a regulatory confrontation, an operational breach — the board has been either absent from decision-making orco-opted by management.

This is the conformance-governance confusion. Conformance asks: do we tick the boxes? Governance asks: do we actually function under pressure? The gap between the two is where young institutions most frequently fail.

Governance experts’ work on governance in emerging economies identifies a related phenomenon: that board effectiveness in thin institutional environments depends less on formal structures than on the quality of information flows, the independence of judgment of individual directors, and the degree to which the Chair actively manages the boundary between oversight and the CEO’s operational mandate. These are relational and behavioural qualities that no governance code fully captures — and they are the qualities that distinguish boards that govern from boards that merely meet.

What sits beneath those qualities, when you look closely enough, is culture. A board that functions under pressure does so because its members have internalised a shared set of values — about purpose, about accountability, about who the institution ultimately exists to serve. That culture is not installed by a governance framework. It is built, deliberately and over time, by the people who lead the institution.

What Emerging Market Complexity Actually Looks Like

The governance conditions I navigate do not appear in the standard governance textbook.

In a systemically important bank operating in a frontier market, the macro environment is not a background condition — it is an active governance variable. Currency risk creates persistent mismatch across the loan book that no provisioning policy fully resolves. Wide geographic operations across fragmented regulatory environments generate compliance and risk management challenges that centralised governance models handle poorly. Concentrated or family-anchored ownership structures — common in frontier market banking — bring capital commitment and long-term orientation, but also require the board to actively manage the boundary between shareholder interests and institutional integrity. The regulatory environment, however much it is improving, still operates with a degree of unpredictability that demands a board flexibility unusual in more stable jurisdictions.

In a private-sector-led financial inclusion consortium, the governance challenge is structurally different but no less demanding. Multi-stakeholder by design — bringing together fintechs and non-bank financial institutions, mobile network operators, regtech providers, development finance partners, and regulators around a shared infrastructure or distribution objective — each partner brings its own governance expectations, risk tolerance, and accountability framework. The board’s role is not simply oversight. It is active alignment management across actors whose interests converge on the mission and diverge on almost everything else.

When it works, it is among the most powerful models for extending inclusive finance at scale. When governance is weak, the consortium fractures at exactly the moments — regulatory challenges, technology failures, partner exits — when coherence matters most. What holds it together is not the governance manual. It is a culture of shared accountability and purpose, and a board that leads by example.

In both contexts, the governance mandate is to hold a more complex brief: to maintain credibility with international partners and counterparties, while remaining genuinely useful to institutions operating under local constraints that those same partners sometimes do not fully understand. That tension does not resolve itself. It is managed — continuously, relationally, and with a great deal of judgment that no code anticipates.

Three Principles That Actually Travel

Through my work in governance and conformance across Africa and other emerging economies — including the advisory and training practice I have built through Aniz — I have arrived at three principles that hold across both the banking and financial inclusion governance contexts.

First: governance legitimacy must be earned locally, not imported wholesale.** International frameworks are important reference points — but they land differently in institutions where identity, whether digital or paper-based, is still being established; where informal systems carry significant weight; and where trust is built through relationships rather than documentation. A board that understands this will invest in local institutional relationships alongside conformance. It will read the room — the cultural room — before it reaches for the governance manual.

This is, at its core, a posture of humility. The director who arrives with all the answers is rarely the director who earns the institution’s trust. The one who listens first, who learns the context before imposing the framework, earns a different kind of authority — one the institution actually accepts.

Second: the Chair’s role in emerging markets is more demanding, not less.** There is an assumption, sometimes voiced and more often implied, that emerging market boards require less sophisticated governance because the institutions are less complex. The reverse is true. When the institutional environment is uncertain, the Chair must exercise more active discretion, more frequently, across a wider range of decisions and shocks — strategic, relational, and occasionally political.

In a multi-stakeholder consortium, the Chair must hold the coalition together across divergent stakeholder objectives — a political and cultural skill that governance codes do not address. This is servant leadership in its most practical form: the Chair who leads for purpose, creating the conditions under which others can contribute, collaborate, and commit toward a common mission. Power exercised in service of the mission, not in service of the role.

Third: information quality is the single most important governance input.** In thin information environments, the risk of board capture — whether by management narrative, dominant shareholders, or the Chair’s own perspective — is significantly higher. Building genuine information diversity into the board’s regular diet means seeking out independent risk assessments, external peer benchmarks, and direct engagement with front-line staff, regulators, and — in financial inclusion institutions — with the end-users the institution is designed to serve.

That last point is where governance and purpose connect. When a board stays close to the people it exists to serve — the SME that needs a loan, the market trader who needs a reliable digital payment system — it is not just gathering data. It is practising accountability. It is also how boards operationalize safety by design—embedding customer protection, responsible lending, and risk mitigation into solutions from the outset, rather than treating them as compliance afterthoughts. It is remembering, tangibly, who the work is for.

What Institutional Partners Are Actually Asking

Having spent years working alongside development finance institutions and international capital providers — as both a board leader and a counterpart in investment decisions — I understand the governance question from the other side of the table. What external investors and institutional partners are really asking when they assess governance is more fundamental than any checklist suggests: can we trust the judgment of this board to do the right thing when things go wrong?*

That question is rarely answered by board composition alone. It is answered by the track record of decisions made in difficult moments — by whether an institution maintained its discipline during a crisis, by how a consortium managed a threatened partner exit without fracturing its governance structure, by whether the Chair was willing to challenge management when performance pressure was at its highest.

For financial inclusion institutions in particular, there is an additional dimension: whether the governance structure demonstrates genuine accountability to the populations being served — not just to shareholders and regulators. Boards that cannot answer that question credibly will find themselves losing the trust of the very people they exist to serve — long before they lose the confidence of their investors.

The signal is not produced by governance conformance. It is produced by governance practice, accumulated over time, in full view of the stakeholders who must ultimately decide whether to trust the institution or not. And at the root of that practice — the thing that makes it consistent, that makes it hold under pressure — is culture. A culture of accountability. A culture of service.

A Practitioner’s Conviction

I do not write this as an academic observer of frontier market governance. I write it as someone who has served across institutions where the decisions taken in the boardroom had direct consequences on multiple stakeholders — depositors, borrowers, unbanked populations, and the international partners whose capital and credibility were at stake alongside the institution’s own.

What I know from that experience is that the institutions that navigate emerging market complexity well are the ones with boards that have earned the trust of their stakeholders — through judgment, through consistency, and through the willingness to make hard calls in service of the common good.

That is not a framework.

It is a culture. It is service. It’s leadership.

The views expressed in this article are those of the author and are solely those of the author.

*Isabelle Lessedjina is MD at Aniz. She serves as Chair of Defy Consortium, a private-sector-led financial inclusion consortium, and of a systemically important bank in a frontier market. She writes on governance, technology and infrastructure, development finance, and institutional leadership in emerging and frontier markets.