A Director and Fellow of Society for Corporate Governance Nigeria (SCGN), Prof. Chris Ogbechie, has sounded a note of warning to companies and institutions that do not practice good corporate governance, saying “there is a price to pay if you have bad corporate governance.”
He said corporate governance is now a global phenomenon and one common threat to failed companies is lack of corporate governance. “One thing is obvious that there is a price to pay if you have bad corporate governance,” he reiterated.
Ogbechie made these submissions at the validation workshop for the review of the Report of the Corporate Governance and Board Structure Survey for Microfinance Banks, organised by SCGN in collaboration with AFOS Foundation recently.
He lamented: “How many companies founded in Nigeria are in their second or third generations?” He added that companies like Nestle, Microsoft, Unilever, Cadbury, among others, were founded by families and have moved to their third generations.
According to him, “Microfinance banks are in a better position to transform lives than the other commercial banks, as they have more numbers. But you need collaboration and to build relationships, to do things the way it should be done. It will improve your value:
He added that as MFIs, “we are serving the bottom of the pyramid. Our job is not just lending but to help small businesses to succeed, stimulate saving culture. If you spend more than you earn, you will be poor for life.”
He tasked microfinance banks to assist the active poor,to help achieve the Millennium Sustainable Goals, adding: “With over 125 microfinance banks, we are still crawling. We need to also use technology to do this. Mobile phone is one technology that can help.”
Ogbechie said compliance to the code of corporate governance must be at the front burner of board meetings and deliberations, as it can lead to better management and international recognition. “Everybody is part of the corporate governance process.
We should make the codes part of our culture and live by example. Most successful MFBs are credit-led. Our job is not to lend them money but to help them succeed. One big issue this will help solve is social problem.”
He said the code of corporate governance for other financial institutions in Nigeria is a welcome deal which should be embraced by all stakeholders.
“I appeal to CBN to give the MFIs some time to adjust and get their business operations to fit the requirements of the code.”
Presentation of the survey background and findings was done by Yomi Adebanjo of SCGN, who said about 920 banks were involved in the survey.
He observed some short comings among the banks and suggested ways to solve them. Some of which he said were, “Significant knowledge gap; no functional website, which helps transparency; no publication of financial accounting reporting.”
Also at the event, the Chief Operating Officer of SCGN, Mrs. Chioma Mordi, made appeal for a period of time for MFBs to adjust before sanctions can be meted to erring ones.
She said: “We don’t want a situation whereby the CBN will publish a code that will be difficult for the banks to comply with. So, we request that CBN should give the banks a time period to adjust.”
She promised that the deliberations and suggestions made at the workshop would be considered in the final report that will be sent to the CBN for inclusion in the proposed Code of Corporate Governance for other financial institutions in Nigeria.