Mr Dele Alimi is the Director General/CEO of the Institute of Directors Nigeria. In this interview with Henry Falaiye, he speaks on the importance of corporate governance and issues around board infringements in Nigeria

There is clearly poor corporate governance in the banking sector as exemplified by the jailing of a former Bank PHB MD for fraud and the Central Bank of Nigeria’s recent indictment of one of the tier-1 banks. Do you think the banking sector is in danger due to poor corporate governance seen among players in the industry?

Truth is that we have come a long way when we look at corporate governance in the banking sector. I agree that for a long time, adequate attention was not paid to good corporate governance in the sector, especially because the regulators did not provide the required supervision.

However, I believe things have changed since then. Yes, we are not where we want to be yet, but like we always say, corporate governance is a marathon and not a sprint. We have to continue improving on our ‘game’ and embracing best practices.

Even in developed countries, where regulators have been very active and dynamic, we have seen instances of infringements.

The crucial thing is that regulators must be very dynamic, continuously monitor the market, provide opportunities for reporting and whistle-blowing so that infringements can be reported and adequately addressed.

In fact, the CBN must be commended for the timely interventions in recent times, which nipped in the bud what could have been a more devastating situation in the banking sector.

Many firms are collapsing in Nigeria due to board infractions and managerial failures. Who is monitoring firms’ management and boards? Is the IoD unable to check its members in such places?

Failures of companies in Nigeria need to be put in the proper context. We have quite a lot of small- and medium-sized companies folding up, mainly due to poor management. Such organisations do not have boards and sometimes, the absence of such a structure denies the organisation of the opportunity of experience and knowledge sharing, which may have helped them to avoid failures.

There is a dire need to work on this and devise a way that the tenets and principles of corporate governance be taught to owner-managers and proprietors of SMEs in Nigeria.

The IoD Nigeria is working with the Financial Reporting Council of Nigeria to identify key SME clusters in Nigeria with the aim of improving the capacities of proprietors through our training programme called the ‘Company Direction Courses’. These courses will provide the foundational education needed by the proprietors.

For publicly-quoted companies, the extant provisions of the various sectoral codes and that of the Nigerian Code of Corporate Governance 2018 are more than enough to guide boards of organisations. Yes, there would be infractions, but the provisions of the regulations are quite clear. So, for SMEs, it has really been a case of self-regulation. However, criminal and fraudulent behaviour is clearly taken care of by the penal codes and is handled at that level.

For quoted companies, the Security and Exchange Commission and the Nigerian Exchange Group have put in place many measures to protect investors and other stakeholders.

For IoD, we do our best to improve the capacities of our members to understand and emplace best practices and deliver on their mandates as directors, whether executives, non-executives or independent directors.

We have also approved and circulated to members, the IoD Code of Ethics, which is expected to guide our members at all times. This code has imbedded in it a whistle-blowing policy, which allows for the reporting of any of our members that errs.

We still hear of insider trading, sexual harassment and favouritism at management and board levels in the Nigerian corporate community. Why is there nothing done about these? Who is responsible for checkmating boards and management executives? Does the IoD have any role to play here?

This question is quite similar to the one earlier asked and I reiterate that the regulations and laws will not completely eradicate criminal acts.

It is, however, important that such infractions must be quickly discovered and perpetrators must face the consequences of their actions. That will serve as a deterrent to others.

As an organisation that advocates good corporate governance and represents directors in their individual capacities, we do have a role to play to ensure the entrenchment of good corporate governance in the private and public sectors of the Nigerian economy.

Our role starts with capacity development involves continuous education and goes into areas of advocacy, where we identify and provide viable policy options to government and regulators.

Of course, we provide services like board orientation, board evaluation, among others, to help boards remain efficient and effective.

Can you highlight the importance of having a good corporate governance in business?

Corporate governance refers to a system of policies and processes that a firm is governed or controlled with. A good corporate governance means that firm is adhering strictly to a set of principles, rules and practices that are of good standards. So, if a firm does that, what it means for the organisation is that it provides it with an efficient process and ensures a lot of consistencies in the act of repeatedly doing the right thing because you have a set of rules and principles that guide everybody in the organisation, from the subordinate to the board of directors. It helps them to ensure a level of efficiency in the process. Because these processes are properly outlined and enumerated, it also allows an organisation to quickly detect problems or errors. Corporate governance helps operations to run better. People know what to do because their roles are outlined in terms of best practices. That will result in having a good reputation. It also aids clarity with the system. There are checks and balances, so fraud can be spotted easily. This will ensure sustainability and longevity in the business.

Despite the number of interventions provided by the Federal Government and the Central Bank of Nigeria for business owners and small enterprises, Nigeria still has a high unemployment rate. How do you think the situation can be changed?

There is a need to improve productivity in Nigeria and because of the kind of population we have, when you compare that to our GDP, it is very low. When we have countries with only 10 per cent of our population having the same GDP as ours, you know something is wrong somewhere. What it literally means is that we are not producing enough. Indirectly, when you are not productive, issues of unemployment will arise. Employment in Nigeria today relies more on the public sector. Government creating employment is a false thing because the government cannot create employment. What government can do is to create an enabling environment that would ensure that there is improvement in productivity. When there are improvements in productivity, employment will increase. When the environment is conducive, you will have people investing more in the economy and, of course, when people invest in the economy, there will be an expansion in our production base, which will bring more employment for people. When there is an improvement in the environment, take the issue of power in Nigeria as an example, things will change. Let’s assume we solve the issue of power and put the amount of money that is spent by organisations on providing alternative power for themselves in production, you will imagine the quantum leap that will happen in that production system. People will create jobs on their own. In any economy, it is organisations that provide the largest jobs. Until we do something to increase productivity in Nigeria, there will be much margin between our massive population and our GDP. Nigeria’s GDP should be more than any country in Africa because of the size of our economy and population. Until we do that, we will continue to cry of unemployment in Nigeria.

How does your institute influence public policy in favour of businesses in Nigeria?

The Institute of Directors has devised a way for advocacy. We call it ‘collaborative advocacy’, which is why you hardly see us in public criticising the government. We point out areas where things are wrong and relate directly with the government. We also let the government know what is wrong and what our own alternative positions about those situations are. We engage with public sector and policy organisations to address issues we feel strongly about, especially as it concerns corporate governance and leadership, and we try to advise what we believe the government should do. Our interest tends to work from the angle of collaboration. Before policies come out, we work with the government on what and how things should be done for directors that will help the Nigerian economy. We work with the public sector to ensure that the right atmosphere is put in place to make directors able to deliver on the mandate that were given by stakeholders.

What are the obligations of your members to your institute?

The obligations are quite clear. The first is that as a member of the institute, we expect you to contribute to its growth in terms of numbers and sustainability. We expect our members to pay our dues as at when due, but most importantly, we expect our members to be shining examples of good corporate governance in Nigeria across private and public sectors.

What type of business services do you provide for your members?

The first thing will be advocacy. What we do is to provide the kind of advocacy that will ensure a good and conducive environment for our members. This is critical for the success of any business. We basically represent and cater for the interest of directors in their individual capacities across the various sectors of the economy. We provide capacity development services. We scan the environment and do a thorough survey and research and look at areas where we think there are weaknesses, especially within Nigeria’s corporate environment. We provide capacity development programmes that will help directors to up their games and deliver better on the mandate given by their shareholders. We also provide support services in the area of board evaluations because it is now part of the law or what I will call regulations. There must be evaluation of the board to assess individual members of the board, to evaluate the board as a body. We also provide independent directors.

The Nigerian corporate governance code prescribes that a particular percentage of a board of a corporate entity, especially quoted companies, must be independent directors. They are directors that have no ties to the organisation in terms of ownership and also in terms of financial gains. These are people that the government believes will provide independent opinions when issues are being discussed by the board. Nigeria has registered independent directors where members can come.