FRC: Compliance with Nigerian Code of Corporate Governance Above Average

•Says adherence to regulation important for FDIs’ inflow

Dike Onwuamaeze

The Director and Head of Corporate Governance Directorate, of the Financial Reporting Council, Nigeria (FRC), Mr. Titus Osawe, has stated that compliance to the Nigerian Code of Corporate Governance 2018 (NCCG), by public quoted companies was above average and growing positively.

Osawe, stated this when he spoke to journalists during a two-day training programme with the theme “Governance, Risk and Compliance (GRC),” which was held by the FRC in collaboration with the Planet Governance Advisory Limited (PGAL) in Victoria Island, Lagos.

He said the whole essence of corporate governance was to ensure that things were done rightly by setting up structures for the organisation and ensuring that they are adequately followed so that entity would outlives its owners.

According to him, “general compliance with the Nigerian Code of Corporate Governance is above average. There is always a limit to what we can capture. But for the ones that are easy to capture like the listed entities, we can say that they are complying especially because it is mandatory. 

“When we started receiving reports and doing our monitoring it is as if people were more interested in box ticking. But because we were saying that that was not what we expected, they are now doing it with evidences that proved that they are actually aligning.  For those that we can capture like the regulated entities we can say to a fairly large extent that they are doing well.”

Osawe, noted that adherence to governance and regulations would enhance sustainability of business entities, attract Foreign Direct Investments (FDIs), and increase inflow of tax revenues to the government.

“So, the message will be that you are shortchanging yourself if you do not do the right thing because at the end of the day you will only have short term benefits.

“The moment that you see entities that are having traction on what they are doing, the foreign investments that we are talking about will come in easily.

“The more we are able to do things right the issue of FDIs will improve because funds flow to where there is regulation. I laugh when people complain about regulation because the environment we are interested in bringing funds from are surviving because they are regulated.

“When there is a proper regulation in a jurisdiction, there is a surety that you will get FDIs,” Osawe said.  

The Chairman of Planet Governance Advisory Limited, Dr. Nosike Agokei, who presented a paper titled, “Introduction to the Concepts of ‘Governance,’ ‘Risk,’ and ‘Compliance’” during the training, said business organisations must establish a governance/business model to address obligations and stay within mandatory and voluntary boundaries as they drive toward their objectives.

Agokei, defined governance as the means by which an organisation was directed and controlled, saying risk was a possible event that could cause harm or loss or make it more difficult for the organisation to achieve its objectives.

But “compliance is ensuring that you follow the appropriate guidelines and use proper and consistent accounting practices,” he said.

He identified the key principles of corporate governance as accountability, transparency, integrity, responsibility, independence, fairness and reputation.  

Agokei, averred that the term GRC was used to describe a framework that enables companies to align their strategies, objectives and operations with regulatory requirements and industry best practices.

“It is about keeping the organisation on track with conducting activities in departments such as internal audit, compliance, risk, legal, finance, IT, HR as well as the lines of business, executive suite and the board itself.

“GRC encompasses various activities, including risk management, regulatory compliance, corporate governance, and information security management.

He pontificated that to run organisations well, including providing oversight, “organisations must establish robust processes to manage their Governance, Risk, and Compliance (GRC) obligations” by putting in place “effective GRC frameworks help organisations to manage their risks and compliance obligations effectively.

“By implementing GRC programs, businesses can make better decisions in a risk-aware environment. An effective GRC program helps key stakeholders set policies from a shared perspective and comply with regulatory requirements. With GRC, the entire company comes together in its policies, decisions, and actions.

“You can make data-driven decisions within a shorter time frame by monitoring your resources, setting up rules or frameworks, and using GRC software and tools.”

The FRC said the training on GRC was designed to provide the knowledge required to effectively improve integrated GRC activities throughout organisations.