Why businesses must grow on corporate governance, by experts

The importance of corporate governance as a safeguard for business survival, profitability and sustainability cannot be over-emphasised.

The benefits of corporate governance lead to efficiency, accountability, transparency and fairness, but the level of compliance is still nothing to write home about.

Over the weekend, members of ICSAN, Lagos State chapter, held a business meeting themed “Investing in Corporate Governance: the Pathway to Sustainability.”

At the meeting, experts and stakeholders looked deep into the matter and submitted that for businesses to thrive, especially now that the economy is struggling, they must embrace corporate governance.

Throwing the first salvo, the chapter’s Chairman, Francis Olawale, said more education was still needed for people to imbibe the principle of corporate governance practice. He noted that the impact has not fully been felt across sectors of the economy.

To him, if adequately explored, it guarantees sustainable development. This is even as the institute has positioned itself to lead the advocacy.

According to Olawale, negative vices such as nepotism, corruption, and bribery, among others have eaten deep into the fabric of the public sector.

“I am of the opinion that robust corporate governance is needed in the sector; if the sector must be revived to contribute immensely to the economy.

“There has been a lot of noise in terms of getting organizations to imbibe corporate governance in Nigeria, but there is need for more education for people to imbibe the principle. Many people just embrace it as a trending issue, but beyond that is to allow it to permeate into the structure and governance of the company.

“We will keep emphasizing on the entrenchment of good governance ideas in our system. Good public administration entails time-tested principles like disclosure and transparency in government operations and affairs, deepening of effectiveness and efficacy at all levels and institution of governance, prudent management of resources, equitable treatment of all citizens, and what is more, unwavering focus of welfare and security of the people.

“As long as there is objective, corporate governance can be entrenched and I am happy that the suspended national code that is currently being looked.”

In a presentation, the Deputy Managing Director, Legal Services, Federal Airports Authority of Nigeria (FAAN), Mrs. Bridget Gold, who said that poor corporate governance mechanisms in firms have proved, in part, to be a major impediment to improving the competitiveness of firms, canvassed for enhanced corporate performance that can lead to higher economic growth.

She noted that a sustainability oriented board will consider the following areas: shareholders and other providers of financial capital, employees, employers, customers and consumers, communities, environment and innovation.

“The best management practices adopted by the best managers cannot succeed in an environment characterised by poor governance.

“Shareholders and financial backers should be informed about how economic growth, social wellbeing and environmental care finds a proper believe in corporate strategies and operations.

This information should be published in the annual report timely and regularly and divulged through the Internet.

Senior Partner, Phillips Consulting Nigeria, Paul Ayim, sued on the need for harmonisation, as lack of regulatory framework, multiplicity of codes has not helped organisations on good corporate governance.

He challenged ICSAN to embark on a drive to create an awareness campaign to employees of organisations so that they understand the principles of corporate governance and their roles and responsibilities with regards to it so that they will think of it in their activities to support the organization to a sustainable development.

“Corporate governance will be used to tackle corruption, if the executive arm of government knows it is going to be held accountable and by the legislator and the judiciary, for the decisions that it makes, it will make it to be up and doing.

But when it becomes a scene when the legislator is under wraps with the executives and then judiciary, there are no checks and balances that is why you see corruption as the order of the day.”

The President and Chairman of Council, ICSAN, Samuel Kolawole, reeled out some measures the institute has taken to promote corporate governance in Nigeria.

“Good corporate governance recognises the interest of every stakeholder; it is not about interest of those in power or office but those in the public sector, that are being governed, and the regulatory authorities.”

According to him, the discipline of the market makes it imperative for the private sector corporate bodies to ensure an efficient use of their resources that they stick to the mission and vision of their corporate bodies.

Despite many regulations in the Nigerian business environment such as Company and Allied Matters Act (CAMA 1990), corporate failures and governance lapses have persisted as a result of many reasons, among which are corruption and poor compliance with the policy.

Survey showed that corporate governance lapses were significantly responsible for the collapse of over 70 per cent of defunct companies in Nigeria over the last two decades, as market share, volume of turnover and asset size is less potent relative to sound corporate governance for the survival of a business.
 
The establishment of the Financial Reporting Council of Nigeria (FRCN), through the Financial Reporting Council Act 2011, was widely praised.

The Directorate of Corporate Governance of the FRCN has the responsibility to develop principles and practices of corporate governance.
 
An Economist, Ilori Kayode, had said that despite all efforts by stakeholders to institute sound corporate governance practices, Nigeria has continuously fared poorly.
 
His words: “We have observed how the lack of an effective corporate governance framework in Nigeria has been exploited by senior managements of companies at the expense of other stakeholders. More staggering is the recently unraveling of bad corporate governance practices.