Address political interference, weak economic institutions to harness corporate governance in public, private sectors — Olusegun Aganga

By Matthew Denis

A former Minister of Finance, Olusegun Aganga has disclosed that for Nigeria to truly harness the power of corporate governance in both the private and public sectors for economic diversification and transformation, it must address certain challenges of political interference, weak mechanism in the economic Institutions and ineffective oversights in checks and balances at government establishments.

Aganga who was the Keystone Speaker at the ongoing 2023 Annual Directors Conference held in Abuja on Thursday said, “When political considerations heavily influence the decision-making process in public organisations, it can compromise the impartiality and objectivity needed for good governance.

“It starts with the process and quality of making appointments. Why must critical appointments such as heads of parastatals, board members, etc, go to party members as ‘dividends of democracy’? That is not the dividend of democracy because The dividends of democracy should be good governance.

“The appointment and promotion of individuals based on personal relationships and political party affiliations rather than on merit weaken the very institutions we need to diversify and transform the economy. We cannot eat our cake and have it. “

The Former Minister stated that there is no effective mechanism for holding economic institutions that are supposed to drive the economic transformation the country accountable that is why there is a high level of waste, leakage and corruption, and poor execution of existing diversification plans and policies.

“We have heard about oil theft for years, we know about insecurity, high levels of unemployment, poverty, inflation, low manufacturing value addition, tough macroeconomic environment. Who has ever been held accountable and how many people have been sacked? Can you imagine this happening in the private sector and the management and board will remain? No.”

Aganga reiterated that limited checks and balances on government agencies and public institutions have led to inefficiencies, misuse of public funds, poor implementation of economic plans and policies.

He said, “There is no effective oversight because of the poor quality of the board, no relevant key performance indicators (KPIs), no reward for good performance and consequences for bad performance or behavior.”

He recommended that the NCCG 2018 for the private sector has been issued and has strengthened corporate governance in the sector. But focusing on private sector corporate governance alone to drive economic diversification and transformation is recipe for failure.

“The public sector has a major role to play particularly in developing countries. It determines how high you can jump and how fast you can run. That is why it is critical for the Financial Reporting Council of Nigeria to issue the National Code of Corporate Governance (NCCG) for the public sector as soon as possible, after due consultations. Full implementation of the Nigerian Code of Corporate Governance in the public sector will have a dramatic and positive effect on our economic institutions.”

The Former Minister suggested that the National Assembly should amend the Acts which established the Ministries and their agencies to make the adoption of the code mandatory for the public sector.

According to him in addition the Acts should specify the skills, competence, and experience (number of years in the profession) required to chair or sit on the board and to be in the executive management team of an Agency.

“That was one of the strategies employed to have strong governance and effective leadership at the Sovereign Wealth Fund (Nigeria Sovereign Investment Authority) and which regulators like National Pension Commission (PENCOM) have used effectively to regulate the pension Industry which is now one of the best regulated sectors.

“Economic Institutions and Agencies must be held accountable because nations fail because institutions are weak or do not exist. Any industrial plan will fail if the relevant economic institutions are weak. Government agencies are economic institutions and the implementing arm of the Ministries and are therefore critical to any economic diversification plan.

“At a minimum, competent technocrats who have a reputation for delivering should be appointed to the boards and management of these agencies. The dividends of democracy as I said earlier should not be about sharing positions to party loyalists but should be about good governance. KPIs should be set, and a comprehensive review of their performance regularly undertaken before any reappointments.

“Both the private and public sectors need to show more commitment to environmental, social and governance (ESG) practices. Investors are beginning to demand this to invest in companies and countries. There is a need for continuous training and capacity building for corporate leaders, regulators, and stakeholders to enhance their understanding of governance principles.”

The Chairman of MTN Nigeria, Dr. Ernest Ndukwe who doubles as the Chairman of the Occasion said, “The long-term sustainability of businesses and the economy is another hallmark of good corporate governance. By focusing on long-term strategies rather than short-term gains, companies contribute to stable, enduring economic health.

“Alongside this, ethical business practices are promoted, fostering responsible decision-making and a positive impact on society. Additionally, governance encourages robust risk management practices, helping companies identify, assess, and mitigate risks. This risk preparedness is essential for preventing crises and minimising their impact on the overall economy, promoting stability and growth.”

Dr. Ndukwe stressed that Nigeria stands at a critical juncture in its economic journey, saying, “As a nation largely dependent on oil, the time has come for us to embrace economic diversification. We must expand beyond the confines of an oil industry-driven economy and explore the vast potential in various sectors such as agriculture, manufacturing, technology, and services.

“Diversification is not just a choice; it’s a necessity for sustainable growth. It reduces our vulnerability to global oil price fluctuations, creates employment opportunities across diverse fields, and fosters innovation and competitiveness on the global stage. This shift will not only fortify our economy against shocks but also contribute to equitable income distribution, supporting the journey towards a more resilient and prosperous Nigeria.

“It’s time to break free from the chains of a mono-economic structure and step into a future where our potential knows no bounds. Let us embrace this pivotal moment to diversify our economy, laying the foundation for a more stable, innovative, and prosperous future for generations to come. The time for economic diversification is now, and together, we can chart a new course towards sustainable growth and resilience.

“I urge each one of us to collaborate, exchange ideas, and foster partnerships that will not only strengthen our organisations but contribute to the overall transformation of Nigeria’s economy. Let us be the vanguards of change, steering Nigeria towards a future that is inclusive, sustainable, and prosperous for all.”

In his opening remark earlier, the President and Chairman of the Governing Council, Chartered Institute of Directors (CIoD), Alhaji Tijjani Borodo said, “in organising this Conference, our Institute intends to proffer far-reaching innovative solutions in governance which will aid and support private sector directors and top decision-makers in all Ministries, Departments, and Agencies (MDAs) of government to emplace and foster a conducive business environment that will encourage robust private sector participation in the Nigerian economy.

He stressed that the theme of this year’s conference, “Driving Nigeria’s Economic Transformation and Diversification: The Role of Corporate Governance,” highlights the crucial role that corporate governance plays in advancing our nation’s economic growth and development.

Alhaji Borodo said, “Your presence here today not only exemplifies your unwavering commitment to advancing good governance practices but also signifies your dedication to driving Nigeria’s economic development.

“The significance of your support in bringing this event to life cannot be overstated. Your generosity, expertise, and resources have been instrumental in making this conference a reality, and we are truly thankful for your unwavering commitment.

“I invite you all to actively participate, network, and share your expertise in the upcoming sessions. Let us work together to drive Nigeria’s economic transformation and diversification through the prism of corporate governance. The future of our nation is in our hands, and I believe that with our collective dedication and knowledge, we can create a New Nigeria that is prosperous, sustainable, and just.”