USA Africa Dialogue Series - Towards transparency in Nigeria’s corporate practices

Towards transparency in Nigeria's corporate practices

KAYODE KETEFE

The culture of disclosure and transparency in management of business has now become so vital in today's world that it is doubtful if any business can have long term sustainability without having it entrenched in its operational principle. As a matter of fact, disclosure and transparency is so critical that the whole idea of Corporate Governance will become a myth without it as it goes to the very essence of governance.
It is noteworthy that the some relevant activities of directors need not only be transparent but must also be disclosed to the appropriate stakeholders in transparent manner! Thus, the shareholders, institutional investors, regulatory agencies and host community of an enterprise all hold on to the twin pillars of these cardinal governance principles to monitor, appraise, regulate or make investment decisions as the case may be in a company.
The importance of principle of disclosure and transparency as a veritable corporate culture for business survival and prosperity recently became underlined at the 2015 Annual General Conference of the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) which this writer was privileged to attend two weeks ago. It was forum at which many talented business minds interacted to provide answers to some governance challenges bedeviling Nigeria.
The Conference, which had the theme "Disclosure and Transparency: a paradigm shift in corporate Nigeria", beamed an intellectual searchlight on the culture of transparency, accountability and probity and underscored how adherence to these ideals could make or mar a business.
The Keynote Address Speaker was the Director General of the Securities and Exchange Commission, Malam Mounir H. Gwarzo, who was represented by the Head of Financial Standards and Corporate Governance Department of the SEC, Mr. Edward Okolo. The paper presenters were the Managing Director/Chief Executive Officer, DCSL Corporate Services Ltd, Ms. Bisi Adeyemi; Chairman, Audit Committee, Nestle Nigeria Plc, Mr. Mathew Akinlade and Chief Operating Officer of City Secretaries Ltd, Miss. Ronke Opajobi.
The Special Guest of Honour, the Executive Governor of Lagos State, His Excellency, Mr. Akinwumi Ambode, (represented by Mrs. B. A. Dapo Thomas, Permanent Secretary, Ministry of Women Affairs and Poverty Alleviation, Lagos State) delivered a goodwill message.
The discourse at the Conference lived up to its billing; it was not only intellectually-stimulating and critically-engaging but also threw up a numbers of answers to problems and challenges facing investment and business management in Nigeria.
For example, the problem of information asymmetry culminating into alienation of shareholders was addressed with a number of recommendations proffered to address the anomaly.
The extant disclosure and transparency regime with its inadequacies and imperfections were diagnosed and recommendations aimed at ushering in a more auspicious, adequate, reliable, disclosure, probity, transparent and accountable system of governance were offered; the challenges being faced by the system of duality of Audit Committees in Nigeria were also analyzed, spawning some "way-forward" suggestions.
Specifically, it was recommended that the practice of issuing timely, consistent and accurate information to shareholders and other stakeholders, including the regulators and the public on critical issues must be embraced by the directors. It was stressed that the information contemplated in this regard must include both financial & non-financial matters (like organisational ownership structure, voting rights, liabilities, control, governance structure and policies and risk factors).
The various regulators like the Securities and Exchange Commission, Corporate Affairs Commission, Financial Reporting Council of Nigeria among others, were also charged to bestow greater scrutiny to corporations and the market by finding appropriate enforcement mechanisms to provide the desired degree of transparency for businesses and corporations.
The shareholders themselves were tasked on the need to be more vigilant and proactive by engaging the directors on issue of aberrations of due process or unwholesome practices and thus contribute their quota to the culture of transparency.
Members of Audit Committee of companies were enjoined to commit themselves to the critical responsibilities that devolve on them which include devotion of enough time to continually educate, update themselves, and be on top of trends and developments on issues relating to audit. They must also demand timely and appropriate briefings and responses both from management and the external auditor to get adequately informed about the company and its financial/ risk status.
Another recommendation was that companies must have adequate and sufficient number of Independent Non-Executive Directors on the board to ensure there are resources for proper composition of board committees in consonance with good governance.
It was also recommended that the practice of Corporate Governance Audit as contemplated by the Draft National Code of Corporate Governance 2015 should devolve exclusively on Chartered Secretaries in public practice because they have the best understanding of the process and the structure of corporate governance by virtue of their peculiar training and experience.
There is no doubt that if the recommendations made at the conference (A few of which I briefly highlighted above) are implemented by all the stakeholders in the Nigerian corporate sphere, there will definitely be a more robust, healthy, observances of Corporate Governance principles and its concomitant evolution of prosperous business climate and sustainable growth and development for Nigeria.

Ketefe, a Chartered Secretary, may be followed on twitter @Ketesco

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