The Nigerian Code of Corporate Governance 2018 aims to institutionalise corporate governance best practices and promote essential corporate governance values and ethics to enhance the integrity of the business environment. These practices include having a board of directors who provide strategic leadership, maintaining effective communication with shareholders and committing to transparency and sustainability. 

“Corporate governance is extremely important for business everywhere, and particularly in Africa where, historically, good governance has been a major challenge,” says Anne Agbo, head of corporate secretarial services at DCSL, a Nigerian professional services firm. 

“Those companies who have adopted good corporate governance entirely set themselves apart and derive a competitive advantage.”

Nigeria has made significant progress in the area of corporate governance. Given the country’s regulatory framework, many companies listed on the Nigerian Stock Exchange have good compliance standards and governance practices. In turn, such businesses are more likely to have a good relationship with all their stakeholders – the company’s creditors, shareholders, employees, customers and the community within which it operates. That can also help them to attract foreign investors. In the long run, good corporate governance standards means these businesses are more sustainable and are likely to outlive their founders.

Corporate governance is, therefore, able to improve the performance of businesses across Africa.

• It ensures corporate success and economic growth; 
• It makes companies attractive to investors and opens them up to different funding sources; and, 
• It enables the board of directors to provide critical stewardship and strategic direction and, ultimately, engender sustainability.

Agbo wants to see: “a complete mindshift regarding the value that corporate governance brings to an enterprise. The general view that ‘if it's not broken, why fix it?’ needs to be jettisoned.”

The key principles of corporate governance are universal for all regions and sectors. However, given that some sectors are highly regulated, such as financial services and telecommunications, their push to implement corporate governance may differ. In Nigeria, these sectors have sectoral corporate governance codes that regulate the governance practices of companies operating within those sectors. 

Since the Nigerian code of corporate governance was promulgated, these sectoral codes have become guidelines which companies are required to comply with in conjunction with the Nigerian code. Therefore, the approach to corporate governance should not be one-size-fits-all but should instead take into account the varying industries and the different sizes, complexities and peculiarities of the companies. 

Best practice is to follow what the codes prescribe as minimum standards and implement these based on the characteristics of the company. For instance, the codes of the Central Bank of Nigeria (CBN) prescribe a minimum of two independent non-executive directors (INEDs) while the Nigerian code prefers that most NEDs are independent. Where there is a conflict between the provisions of two codes, it is the stricter provision that a company is expected to apply. In this case, if the company was a bank, it should have a minimum of two independent directors in compliance with the CBN code and then try to make the majority of its NEDs independent. 

DCSL, as corporate governance consultants, has advised companies in different sectors of the economy and provided support with implementing the preferred recommendations through an appraisal and governance audit. DCSL provides support for companies implementing the recommendations made during the appraisal, not only to improve their governance processes and practices but, ultimately, to ensure a culture of corporate governance company-wide. 

“We have seen many boards and individual directors become more effective over the years and take their leadership responsibilities very seriously,” Agbo says. “This for us at DCSL has been very rewarding and gratifying.”

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