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The calm after the storm

In February 2018, 437 top business executives representing 35 leading companies listed on the Nigerian Stock Exchange (NSE), gathered at the waterfront Civic Centre in the highbrow Victoria Island district of Lagos, Nigeria.

The prestigious venue, with its backdrop of luxury boats anchored at the jetty, is well accustomed to hosting high-profile events. Nonetheless, there was something special about this one. It was not just another event. This particular occasion held special significance for the growth and future of corporate governance in Nigeria. It was the certification ceremony hosted by the Nigerian Stock Exchange and The Convention on Business Integrity (CBi) for those 35 companies and 437 directors that had made it over the 70 per cent threshold score for the Stock Exchange’s Corporate Governance Rating System (CGRS).

The companies were awarded the CGRS certification while the directors were awarded certificates for success in the Fiduciary Awareness Certification Test (FACT), a key component of the CGRS. The buoyant mood in the hall was a confirmation of the positive outlook held by the certified companies and individual directors. It is a bold step towards sustaining the high level of corporate governance demanded of companies that have signed up for the scheme.

Important investor tool

There was more to celebrate. The Corporate Governance Index (CGI) of the Nigerian Stock Exchange was unveiled on the same day. The Index will track the performance of the 35 CGRS-rated companies using their market capitalisation, free float and corporate governance rating scores. The GRI will be reviewed on a bi-annual basis at which point other companies that have become CGRS rated in the interim may be added to the Index or companies that have had their ratings suspended or withdrawn may be removed. It is expected that this Index will be an important tool for investors keen on investing in well-directed Nigerian companies and companies that are keen to distinguish themselves by leveraging corporate governance. Speaking on the newly introduced Index, Oscar Onyema, the visionary chief executive officer of The Nigerian Stock Exchange said: “The launch of the Corporate Governance Index is an important milestone to strengthening listed companies by tracking their corporate governance practices. This index will increase transparency in our market and provide investors additional data points upon which to make sound decisions”. He added that “the companies that have successfully completed the process will be more positively looked at whilst trying to raise and access capital within or outside of our jurisdiction.”

The CGRS certification is an indication that progress has been made in the quest to entrench better corporate governance practice in Nigeria. Corporate governance commentators believe there is cause to celebrate while expressing cautious optimism after the seismic events of 2016 followed by the almost complete absence of activity around corporate governance in 2017. During a visit to the Lagos headquarters of the Financial Reporting Council in April 2017, the once bustling office was quiet like a ghost town. Officials said there was little happening since the unified code of corporate governance was suspended in October 2016.

Troubled times

The year 2016 goes down in history as the most turbulent period for Nigeria when the history of corporate governance was written. It was the year during which we witnessed the attempt by the Jim Obazee-led Financial Reporting Council (FRC) to roll out a new unified national code of corporate governance without adopting an inclusive, win-win approach. The code was issued by the FRC on 17 October 2016 but was suspended by the Federal Government on 28 October 2016 following concerns raised by a cross section of the private and not-for-profit sector. The Obazee train spun out of control and crashed amid a barrage of criticism of high-handedness and disregard for the opinion of key stakeholders. It left behind distrust and a deep sense of betrayal. Obazee forgot that corporate governance is a joint effort between the government (as the regulator) and the regulated (private and not-for-profit sector). In the wake of that blunder, Nigerian President Mohammadu Buhari dissolved the board of the FRC and removed the executive secretary/chief executive, Obazee from office. President Buhari reconstituted the FRC board under the leadership of Adedotun Sulaiman as chairman and Daniel Asapokhai as executive secretary/chief executive officer.

In an article published in the Spring 2017 edition of Ethical Boardroom magazine, I predicted that the Nigerian Financial Reporting Council would need to pull itself out of controversy and start a healing, consultative process with stakeholders following the suspension of the unified code of corporate governance issued by the council in October 2016. On Thursday 4 May 2017, Honourable Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, inaugurated the new board of the Financial Reporting Council of Nigeria. The board, made up of 23 members, has a highly respected technocrat in Sulaiman as chairman. He holds a first-class degree in business administration from the prestigious University of Lagos and is a graduate of Harvard Business School. Sulaiman is perfect for the role. His choice has been commended by stakeholders across various sectors. He is seen by key operators in the private sector as being ‘one of them’, while also highly respected by the public sector, having served as engagement partner on major government transformation projects. Sulaiman served as managing partner of Arthur Andersen Audit and Management Consulting Practices and country MD of Accenture in Nigeria. He has more than 28 years’ experience in transformational engagements in strategic plan development, financial management and business ethics. Sulaiman belongs to the private sector, FRC’s key stakeholder group that felt they were dealt a rough hand by the previous FRC leadership. He has served or is serving as chairman of several organisations, including Accenture Nigeria, IHS Towers, Secure ID, Nextzon Business Services, InterSwitch, MoneyBox Africa and Cornerstone Insurance Plc, and is non-executive director of Cadbury Nigeria. That is the kind of experience the FRC board will need to navigate through numerous challenges ahead.

New leadership

The new FRC executive secretary, Daniel Asapokhai also has what it takes to succeed in the role. He comes to the office with a rich consulting background. Prior to his appointment, he was a partner and a financial reporting specialist at PwC Nigeria. He struck the right tone after assuming office by jettisoning the confrontational hard stance preferred by his predecessor. Unassuming, urbane and self-assured, his approach is working. Adversarial swords have been sheathed… for the time being.


Reintroducing the controversial National Code of Corporate Governance, remains a priority for the council, according to Asapokhai. Speaking at a KPMG-hosted forum for Nigerian CFOs in October last year, he publicly acknowledged efforts made by the previous leadership of the FRC, saying “a lot of work went into the suspended code… I think within six months we should be in a position where we can expose the document for consideration.”

In January 2018, he began to make good on that promise with the announcement of a technical committee, chaired by Muhammad K. Ahmad, a public sector executive with more than 35 years of experience who oversaw the growth of the pension industry in Nigeria from nought to an asset base of N4.7 trillion under management. Apparently aware that stakeholders are still wary of the council’s intent, the new leadership has said that the approach of the current board of the FRC would be significantly different from that used by the previous board within the next six months and a board committee to supervise that work had already been established.

What can we expect in 2018? Following its inauguration in May 2017, the new FRC board spent seven months crafting a new strategic direction, priorities and plan for the Council in the short and long term. FRC’s short-term priorities include review and reissuance of the national code of corporate governance, conducting a post-implementation review of International Financial Reporting Standards (IFRS) adoption in the country and introducing ‘IFRS-Lite’ for the Small and Medium Enterprises for the SME sector.

One of the areas identified is to work with primary regulators, such as the Central Bank of Nigeria, the Nigerian Pension Commission, National Insurance Commission and Nigeria Communications Commission and others to help push its agenda.

In a clear indication of the FRC board’s direction, the new chairman has stated that the absence of a National Code of Corporate Governance provided a vacuum, which industry regulators filled by introducing various sectoral codes within their respective spheres of regulatory purview. The new national code, he said, would harmonise and streamline those various sectoral codes. The committee has been directed to ‘produce an exposure draft of the code ready for release within the first quarter of this year’.

The FRC has been encouraged by the strong support from international development partners. Asapokhai noted that the body has received a much-needed boost with the pledge by the International Finance Corporation (IFC) and other financial institutions to support the work of the committee. IFC has always maintained that corporate governance practices are still insufficiently known and poorly implemented in some West African countries. Through its Africa Corporate Governance Programme, IFC, with the cooperation of Switzerland’s State Secretariat for Economic Affairs, is committed to helping Nigerian businesses adopt good corporate governance practices. IFC believes such adoption can help companies enhance operational and financial performance, mitigate risk, safeguard against mismanagement and help companies attract new investments and capital to finance their growth. The Nigerian corporate governance watchdog should tap fully into the rich portfolio of advice, solutions and training that the IFC has to offer.

Better awareness

A 2016 report titled the State of Corporate Governance in Africa: An Overview of 13 Countries published by the African Corporate Governance Network and NEPAD Foundation, reported an increasing awareness of the importance of sound corporate governance as a major factor in the quest to attract foreign direct investment into Nigeria. It predicted that corporate governance will drive economic performance and growth of the economy. We are beginning to see that.

We expect increased advocacy with the entrance of a new professional membership body called the Association of Corporate Governance Professionals of Nigeria. Formed in June 2017, it has the vision to become the national reference point in corporate and organisational governance. This new addition will bring added dynamism to the vibrant scholarly leadership that the Society for Corporate Governance Nigeria has championed for more than 10 years.

With the successful launch of the Nigerian Stock Exchange Corporate Governance Index, I expect greater adoption of best-in-class corporate governance practices. Stakeholders are looking to the board of the Financial Reporting Council of Nigeria to provide strategic leadership that will boost the economy. The board, which has representatives from seven government agencies (including the central bank and the Inland Revenue service) and 12 professional membership associations representing chartered accountants, stockbrokers, estate surveyors and valuers and chambers of commerce, will need the collective knowledge and wisdom offered by its diverse membership to navigate the tortuous road ahead. Now that the storm is over, the FRC ship can be steered safely to shore as it sails in calmer waters.


Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.

Ethical Boardroom is a premier website dedicated to providing the latest news, insights, and analyses on corporate governance, sustainability, and boardroom practices.


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