Onyema identifies corporate governance as pre-requisite for promoting economic growth
Chief Executive Officer, Nigerian Stock Exchange (NSE) Oscar Onyema, has identified economic and corporate governance practices as pre-requisites for promoting economic growth, reducing poverty and promoting market efficiency.
The NSE chief added that it also help to encourage private financial flow, wasteful spending and consolidates democracy.Besides, he said investors’ confidence in the Nigerian capital market has remained challenging based on perceived inadequate disclosures, corruption and poor understanding of fiduciary responsibilities on the part of directors.
Speaking at the formal inauguration of Institute of Directors Nigeria (IoD) independent director’s register in Lagos, Onyema, said the relevancy and importance of good corporate governance practices in public companies, whether listed on an exchange or in a private capacity, cannot be overstated.
Accordingly, he said with the launch of the independent directors’ register by IoD and its associated stringent requirements for entry, we hope to see improvements, adding that the Exchange will continue to promote sound business ethics and principles as we look to grow Nigeria’s capital markets, and ultimately Africa’s largest and most enterprising economy.
He said it requires checks and balances on the power and rights accorded to shareholders and the society at large, stating that good corporate governance can also drive a country’s ultimate fortunes from an economic standpoint.
According to him, empirical evidences confirms that high levels of transparency have been found to be associated with lower country risk premiums and costs of capital, as well as higher trading volumes or liquidity.
“Companies with low corporate governance standards have been shown to experience higher capital costs and greater risk premiums on their bonds and other capital raising offerings,” he said.
He added that governance deficiencies have been shown to be associated with increased probability that takeovers may not be successful, with a greater probability of a decline in a company’s intrinsic value.
His words: “In the selection of independent directors, we must not look simply for high profile names. The issue is not of lending a brand but having someone with an independent state of mind. In an economy fired by innovation, our biggest threat is obsolescence. Periodic training of Directors is a must and unfortunately there are few courses designed primarily for this purposed.”
Conscientious independent directors would do well to get some due diligence done on the company’s governance practices especially if they are invited to join controlled companies.
In his remarks, Former High Commissioner to the United Kingdom and Chairman, Board of Directors of SystemSpecs, Dr. Christopher Kolade, said an ideal independent director is someone who has a demonstrable track record of success in business and who from an organisational viewpoint has intellectual, financial and political autonomy with a deserved reputation for open articulation of own views when required.