Reforms & Policies


Corporate governance is the system by which companies are directed and controlled. It involves regulatory and market mechanisms, and the roles and relationship between a company’s management, its board, its stakeholders, and other stakeholders and the goals for which the corporation is governed. From a layman stance, corporate governance is the principle and value that guides a company in the conduct of its day-to-day business and how stakeholders interrelate among one another.

There are statutorily two types of stakeholders; external and internal. The main external stakeholders include shareholders, debt holders, trade creditors, suppliers, customers, and communities affected by the corporation’s activities. The internal stakeholders consist of the board of directors, executives, and other employees. Corporate governance is therefore the tool that catalyze the desired objectives and “cause of doing business” between the two groups.

Corporate governance is relatively a new concept in Nigeria. Its birthing can be linked to the change from military to civilian government in 1999, which brought about a new feeling about the political environment in Nigeria. This change in the system of government invoked a dire need for total reformation of the Nigerian socio-political environment. The country’s citizenry and the whole world expected improvements in the fundamental human rights of Nigerians, judicial system, the socio-economic environment, and the different sectors of the Nigerian economy, the capital market not left out.

The Nigerian Capital Market was established in 1960 but officially started business operation on its floors in 1961 with only 19 securities traded. Prior to December, 1977 it was called the Lagos Stock Market. The Nigerian Stock Exchange (NSE) is the central point of the capital market while the Securities and Exchange Commission (SEC) serves as the apex regulating body and the Central Securities Clearing Systems (CSCS) Limited as the clearing house. The Exchange is licensed under the investments and securities Act (ISA). It is a full member and executive committee member of the African Securities Exchanges Association (ASEA) and an affiliate member of the World Federation of Exchanges (WFE). Presently, the Nigerian Capital Market services the second largest financial centre in Sub-saharan Africa.

The primary aim of the Nigerian Capital Market is to mobilize long-term funds. It provides a mechanism for mobilizing private and public savings and makes such funds available for productive purposes. The market is an automated exchange and provides listing and trading services, as well as electronic clearing, settlement, and delivery (CSD) services through the CSCS. The CSCS also offers custodian services. In addition, the Nigerian Stock Market through the NSE offers market data dissemination services, market indices, and provides a means for trading in existing securities.

The Nigerian Capital Market trading focus is segmented into 12 industry sectors: Agriculture, construction/Real Estate, Consumer Goods, Financial Services, Health, Industrial Goods, Information and Communication Technology (ICT), Natural Resources, Oil and gas, Services, Utilities, and Conglomerates. The Nigerian Capital Market is divided into two markets – primary and secondary.

The major instrument used to raised fund for the market includes; debt-Government Bonds (Federal, State, and local Government), Equities – ordinary and preference shares, Industrial Loans/Debenture stocks and Bonds.

The Nigerian Stock Exchange is governed by a National Council which comprises nine (9) members; two (2) individual ordinary members and seven (7) dealing members. The council directs the market’s business and financial affairs, strategy, structures and policies, monitors the exercise of any delegated authority, and deals with challenges and issues relating to corporate governance, corporate social responsibility, and corporate ethics. The president of the council is Alhaji Aliko Dangote. The Executive management is headed by Mr. Oscar N. Onyema as the Director –General/Chief Executive Officer (CEO).

The market’s regulatory body, SEC is headed by Ms. Arunma Oteh as the Director – General. While the clearing house, CSCS has Kyari Abba Bukar as Managing Director/Chief Executive Officer (CEO).

The Nigerian Capital Market have trading floors/branches in Lagos, Abuja, Kaduna, Kano, Onitsha, Port-Harcourt, Ibadan, Yola, Benin, Uyo, Ilorin, Abeokuta, Owerri, and Bauchi.

Simply put, development is the act of improving by expanding, enlarging or refining, or a process in which something passes by degrees to a different stage, especially a more advance or mature stage. The focal point here therefore; is effectively employing and utilizing corporate governance in bettering the Nigerian Capital Market.

With development in the capital market as the concentration of this essay, how and who implements corporate governance in the market? What has been the impact – positive or negative? If positive, is that the everlasting or unremittingly acme? If negative, can it be remedied?

Answering the above questions and a few others not stated without bias will have a bun in the oven for the best discussion they is on corporate governance and development in the Nigerian Capital Market.

Every game needs a set of rules – both for reward and punishment. The capital market is not an exception. In order to develop, the market institutions must abide by the new corporate governance code that was unveiled by SEC, the regulating body. The set of policies and law in the code will put the market operations of public corporations under tighter regulatory oversight for better performance. Infractions will also be more speedily dealt with. With this development, the era of insider abuse, low professional standards, conscious and unconscious biases, deliberate corruption such as declaration of false profits and other unethical practices will reduce.

Timely, accurate and regular capital market – related information to the investing public will go a long way to develop the capital market. Making available this relevant information is not enough, being truthful and applicability is more pivotal. In recent time, the Nigerian capital market has been notorious for share price manipulation and falsification of financial records of organizations. Thus, the need for new corporate direction.

Education, they is pas seul between been informed and knowing the vitality of the information. Consequently, effective corporate governance geared at developing the market should ensure the investing public is effectively educated. Nigeria is a consumer state. To this end, the citizenry should be educated on the need to invest for the future. People should spend less, invest more.

They should be strict enforcement of rules and regulations to govern the market operations. The key to understanding the nature of the on-going crisis in the market lies in good corporate governance which warrants a thorough grasp of the ground rules of the activities of the market and her institutions and the application of same. The law, being the subjection of human action to the governance of rules, is the conditio sine qua non for the optimal performance of corporate entities in the modern world. While law might not be a hold-all, it is hardly in dispute that without acknowledging the centrality of law in the scheme of things, it is unlikely that society would go far in the achievement of set objectives and guaranteeing the well-being of citizens.

The sum-up is; in a country where there is little respect for ethics, strict and constant oversight and periodic enlightenment about the market are vital.

Who implement? In business it is a verity that institution are not stalwart and robust as a result of its structure or even product, but human resource. Those saddled with the responsibility of steering corporate governance in the market should possess the four core human drives: the drive to acquire, the drive to bond, the drive to learn, and the drive to defend. I will like to add a five; the drive to feel. Employment into the market’s various institutions should follow due process and based on merit-people of unquestionable character and integrity. The recent rumoured fake doctorate and professorship and even the oppugn bachelor’s degree of The Exchange’s former DG, Ndi-Okereke Onyiuke, the unending saga of SEC’s DG, Ms. Arunma Oteh and stock manipulation charge against the NSE National Council’s president, Alhaji Aliko Dangote comes to fore, and should be speedily addressed if development in the capital market is an “unsloped” pursuit.

The positive and negative impact of corporate governance in the market; the “boom and burst” of the market is an outflank acknowledgement to the above. The galactic rise of the market capitalization from N800 million in 2000 to N13.3 trillion at the beginning of 2008 is clear pointer. The only house ever built in my poor family while in SS2 in 2007 became a reality as a result of the profit gotten from my mother’s peasant farming and trade accruals that were invested in the capital market.

To the negative, the global financial meltdown which started in the US in 2006 as a result of the glut in the mortgage industry spread like a contagion to Europe, Asia, and then to the emerging market in Africa, including Nigeria. That ill wind got to Nigeria in 2008 and no stock market was spared of the catastrophic meltdown just like the Great market crash of 1929.  This collapse posed the question of indeed not corporate governance but actually it absence in Nigerian capital market. The massive fraud and cooking of the books in companies, not to mention insider dealings and compromised boards in many companies as well as spineless shareholders’ associations audit committee and rubber stamp Annual General Meetings.

A number of factors have been blamed for this sorry state of affairs and they include: global phenomenon, pull-out of various foreign investors, lack of infrastructure and high cost of production, impact of commercial banks, avalanche of private placement offer, inability of the Federal Government to plot a bail-out, regulating inconsistencies, and so forth.

Corporate governance failure have resulted to many consequences: loss of confidence in the Nigerian economy, mega losses by investors, tie down of trillions of naira in unsalable stocks, credit crunch in the economy, loss of confidence by banks and other lenders on shares as a collateral for facilities, et al.

Remedying the situation and charting a developmental horizon is possible. This is because failure in corporate governance is by no means a peculiarly Nigerian Phenomenon. The failure of Northern Rock, Freddie Mac, Fanny Mac, Lehman Brothers, Bear Stearns, AIG Investment Bank, Washington Mutual and Wachovia and the Central Bank of Iceland, and the sputtering state of other sectors of the Nigerian economy confirms that the need for effective corporate governance is worldwide as well as needed in the entirety of the Nigerian economy. That some of the biggest corporate entities –General Motors, Chrysler, and Ford also recently manifested symptoms of poor corporate governance warranting infusion of humungous funds from the US treasury and loss of managerial autonomy of their board is an important teaching moment for all those who had believed that bad corporate governance is a third world disease or a malady of Nigerian Capital Market alone in this case. Accordingly, they are no time or need to play the blame game, pray or keep on crying. Proactive measure channeled at resuscitating the market will suffice.

First and majorly, only direct physical injection of funds can change the direction of the market just as the Asset Management Corporation of Nigeria (AMCON) did for the money market, they should be abolition of VAT on capital market transactions, the market should be Privatized, there  is the need for excellent relationship between the board, the management and the other stakeholders, the market audit should be regular and levelheaded, they should be a balanced focus on the various 12 industry sectors of The NSE. There is a need to review the SEC corporate governance code or ensured judicious implementation of the existing one. SEC should encourage whistle blowing system in the market-simple, set efficient performance measurement system for senior management and the board, as well as encourage efficient process and performance evaluation and reporting to stakeholders, regular training and seminar and workshops for senior management to strengthen leadership quality.

Truly, the aforementioned measures are not quick fixes; being consistent will nascence all round development in the Nigerian Capital Market and achieve NSE poise of championing the acceleration of Africa’s economic development and to become “the Gateway to African Markets”.

About the author

Elvis Boniface

Ordained Evangelist of the Education Ministry. Learning is my lifestyle, credo and religion. On a mission to disrupt and redirect Africa's Education conversation using Technology and Media. We can do it. Open to discuss any Education initiative and idea. #peace

Speedy reach: +2348185787349 &

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