How can we use the law to create change?

John F. Kennedy said ‘those who make peaceful revolution impossible will make violent revolution inevitable’. If Nigerians continue to be passive about changing the affairs of State, change will come violently.

A few weeks ago the youth in Zaria protested the fact that they had not had electricity for weeks and what started as a peaceful protest turned violent. According to news reports, their anger and frustration spilled over to their conditions in Sabon Gari Local Council and they attacked the convoy of Governor Sambo of Kaduna State who was there to commission some projects.

Earlier, in May, the citizens of Borno State showed their displeasure at the governance of their State by throwing stones and sand at the Governor’s father who is alleged to be a strong influence on him.

Now we are embroiled in a full scale war in the Niger Delta which has been a long time coming, with years of litigation, Oil Mineral Producing Area Development Commission (OMPADEC), petitions, executions, the Niger Delta Development Commission (NDDC), protests, the vandalisation of pipelines and oil producing equipment, kidnappings, Ministry of the Niger Delta, murders and now the end…after all it cannot get worse than this. Or can it?

For over six months, the Pedestrian Lawyer has tracked some of the atrocities done in the name of law, by lawyers, law makers and law enforcers and the impact on Nigeria’s socio – economic and political pulse. Slowly a consistent pattern has emerged from the response. Many readers say, “Thanks for the information, entertaining as well as enlightening but now what? What would you like us to do?” Good question but no one answer. Law is not magic…law cannot change the way people behave and create change but people can use the law to change the way people behave and create change.

I think if things are going to change in Nigeria, then the leadership has to change. If the leadership is going to change in Nigeria then the quality of those who participate in elections and serve in public office has to change. If the quality of those who participate in elections is going to improve then the electoral process has to improve. For the electoral process to improve we have to have people in the executive and legislature who have the will to make changes to the electoral law and process. If we are going to have executives and legislators with the will and decency to make the necessary changes to our electoral law and process then we have to have the right people in these positions of leadership…which brings us back where I started: for leadership to change, the quality of those who participate in elections has to improve.

So my response, to those who want to know what we can do, is: if you think you have what it takes and mean well, then run for political office. 2011 is around the corner and our newspapers are filled with reports of the preparations of those who currently have the controls of the bus and are driving the country closer to a precipice to retain their hold on the steering wheel.

The first step in the journey to gain some control over our country is to register a political party under the provisions of the 2006 Electoral Act.

First incorporate a limited company in the name of the political party and register the party at the Independent Nigerian Electoral Commission (INEC) at least six months before elections. Since we do not have the 2011 election timetable, register at the latest by June 2010. Upon submission of all the documentation and fees required you will receive a letter of acknowledgement; keep it safe. If thirty days after you submitted the registration application you have not been registered by INEC, Section 78(3) says if the party meets all the conditions of the 1999 Constitution (Sections 221-229) and the Electoral Act, then the party shall be considered as registered. This is tricky – look out for INEC using this presumption to trip you up later. Some of the constitutionally provided conditions to party registration include adhering to federal character in the composition of the party officials and having the head quarters of the party in Abuja. If INEC refuses to register the party, party promoters have only thirty days from the receipt of the letter of notification to challenge the decision in court.

Avoid those who come late in the game to preach consolidation of resources because a potential landmine could be a merger with another party which INEC must approve and must be notified of at least six months before elections.

Once registered there are other rules for political parties to adhere to such as not holding funds or assets outside Nigeria and providing INEC with records of election expenses and twenty one days notice of any party conventions for either the election of party officials or the nomination of candidates.

On party financing it is interesting that the Electoral Act recommends the maximum amount to be spent by candidates in the elections: five hundred million naira for presidential elections, one hundred million for gubernatorial elections, twenty million for Senators and ten million for members of the House of Representatives. No wonder politics is a duel to the death in Nigeria, anyone who has ‘invested’ this much in winning an election will want to secure the investment and ensure it yields competitive dividends. Parties are also supposed to refuse anonymous donations and disclose donations of one million naira and above.

Once registered, you can start campaigning, raising campaign funds and trying to raise the awareness of your constituents and your target audience. A million and one underdog stories abound, most recently and amazingly, the story of Obama.

A sad truth is that getting involved in elections is risky, especially if you want to do it the right way; without political godfathers and dancing in shrines. Apart from possible financial ruin, mental and physical upheaval and the strain it will place on your relationship with family and friends, there is the very real danger of paying the ultimate price as Funsho Williams and many other Nigerians have done.

However, the alternative which is to do nothing but keep grumbling to ourselves and prepare our children for a future outside their country is not acceptable. Why? Because all those risks and dangers listed above are already being lived by those in the Niger Delta. Because the violence we fear for getting involved, might still probably come because we did not get involved.

Despite Ekiti and the lip service being paid to electoral reform by the current government, I feel encouraged by the judiciary to think the 2011 elections could be the start of the change we all want. If the judicial renaissance and independence we have witnessed over the last two years, starting with the Supreme Court decisions in the Ladoja impeachment case and Amaechi vs. PDP, continues, then there is hope. But this hope lies not only with the judiciary but with believing individuals who start this journey and who must continue to the identified destination. The Supreme Court judgement would not have been possible if Amaechi had given up his mandate and knowing Nigeria, the pressure must have been immense for him to do so. We have to keep working within the law and the processes which guide us and then, only then can we truly understand the limitations, appreciate the weaknesses and then make the changes that we need before change is forced on us.

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Why Would Obama Come Here When Doing Business is getting harder?

The discussions about why President Obama is visiting Ghana in July and not Nigeria are quite amusing, almost as amusing as President Yar’adua’s bewilderment about Nigeria not being invited to the G20 Summit. Wole Soyinka reasonably irked by the discussion, and when asked about it recently, said that he could stone President Obama if he graced Nigeria with his presence. A few days later there was a public response from the Presidency regarding Soyinka’s remarks. According to Ambassador Jibrin Chinade, Special Adviser to the President on Foreign Affairs, “It’s most unfortunate that a prominent citizen like Soyinka seized the opportunity…to attack his country…for somebody to speak at an art exhibition to say nothing else than to denigrate himself and his country that has done a lot for him is unfortunate and highly embarrassing.”

Apart from being slightly amused at the thought that Soyinka’s comments would have been okay if Nigeria had not done anything for him, I was more interested in understanding if Chinade deliberately missed the real issue behind Soyinka’s comment, or if he was pretending not to see the elephant in the room.

The issue is: why is Soyinka angry at the thought of President Obama coming to Nigeria? What is the reason for this outburst from a man who, while we acknowledge is no fan of most of our leaders, we can presume, like most of the world is a fan of Obama?

Because coming to Nigeria would be tantamount to a stamp of approval for the Nigerian government and the direction in which they are steering the country. Because coming to Nigeria would be like saying, Nigeria is doing well and this is a country to be associated with. Because coming to Nigeria would validate the state in which we find ourselves: total collapse of infrastructure and social services, war in the Niger Delta, rampant corruption amongst public officers and consistent violation of the electorate and electoral process.

But that is not the end of the story. If this story was unique to Nigeria which it is not – we only need to look at Zimbabwe and other war torn countries such as Angola and Sudan to find similarities with the situation we are in, then it makes sense that Obama would want to go to Ghana. Because Ghana is everything we are not. Ghana is a shiny example of a West African country which has turned itself around and is doing well.

Forget the more recent examples of Ghana outshining us with their free and fair elections or even the fact that more and more Nigerians are moving there or going there for their holidays, let’s use just one measure of comparison: doing business.

For the past six years, IFC and the World Bank have conducted and published a global survey ‘Doing Business’ on the regulatory reforms that make it easier to do business around the world. The Doing Business project is based on the efforts of thousands of local business consultants, lawyers, accountants, and government officials along with leading academics around the world that provided methodological support and review.

On May 21st 2009, Business Day ran an article with the heading ‘Again, Ghana Beats Nigeria in Business Competitiveness. The first line in the article was: ‘Once again, Nigeria could not earn a mention in the 2009 global survey on regulatory reforms…Ghana adjudged the best place to do business in West Africa.’

This could end the discussion on why Obama would be more interested in Ghana than Nigeria: Ghana is doing better. Out of 181 countries surveyed for the 2009 report, Ghana ranked 87th while Nigeria ranked 118th. For the past three successive years Ghana was one of the worlds’ best reformers of business and the best in West Africa. This year, three African countries, Senegal, Burkina Faso and Botswana were amongst the world’s best 10 reformers. Senegal which moved nineteen places in a year to rank 149th in 2009 made reforms in starting a business, registering a property and trading across borders. In starting a business, Senegal started a one-stop shop that merged seven start-up procedures into one and the time required to start a business fell from fifty eight days to eight.

The ten things which are considered in the ease of Doing Business are: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

So where does Nigeria lie? Although the average income of Nigerian citizens (GNI per capita) at $930.00 is higher than Ghana at $590.00, our business processes are not better. When it comes to registering property, Nigeria holds the dubious position of being one of the most expensive and being one of the most regulated at 176th. We are also at the bottom of the list when it comes to paying taxes (120th), trading across borders (144th) and dealing with construction permits (151st).

One of the reasons why we are doing so badly with registering property is the outlandish Land Use Act of 1978 which requires Governor’s consent for property transfer. Some states have been smart enough to delegate this requirement while others hold on to it for reasons that most likely cannot be held up to scrutiny.

Unfortunately, most of these criteria used in ranking the ease of doing business are linked to the legal profession. Lawyers, judges and regulators have the power to do something about how long it takes to do business in Nigeria. For example with enforcing contracts, courts which have implemented the new High Court rules such as Abuja, Kaduna and Lagos are doing better already.

The solutions to these challenges lie with our laws and regulations. Was Nigeria’s ‘doing business’ rating a topic at the Section for Business Law conference in April? If it wasn’t then it should have been and if it was, what are the next steps?

Equatorial Guinea, a small country of only 700,000 people opened a liquefied natural gas facility two years ago which already exports over 3.7.million tonnes of LNG while Nigeria with a capacity to do a lot more, continues to flare and waste its gas. Considering the importance of energy to global politics and economy, if President Obama decides that his next visit to Africa will be to this small country, I hope no one will wonder why.

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Cadbury, AP, Dangote….Time to Up Our Corporate Governance Game

The ex Director General of the Nigerian Securities and Exchange Commission (SEC), Al-Faki announced last month that a new corporate governance code for quoted companies would soon be released; and not a moment too soon. Considering that the Cadbury scandal happened in 2005, it is a disquieting that regulators did not do more to put a stronger corporate governance structure in place for Nigerian companies and their investors. Not long after the Enron and Worldcom scandals the United States enacted the Sarbanes-Oxley Act in 2002 to block the loopholes in company reporting standards and improve corporate governance by amongst other things, enhancing conflict of interest provisions for directors and managers and asking directors, officers and 10% owners to report transactions within two days.
However, here we are, embroiled in another corporate scandal with the alleged manipulation of the AP share price and the Independent Shareholders Association of Nigeria screaming blue murder because according to it “the management of the truth of the AP insiders trading by both SEC and NSE calls to question the moral latitude and commitment of the, board/council to the overall interest of more than10 million shareholders in the Nigerian Capital market who have been and continue to be short-changed”.
Maybe a more robust corporate governance framework would have helped in mitigating the losses being incurred by the shareholders of AP and possibly other shareholders we are not aware of. Ideally, the share price of Dangote Flour and Sugar should fall too considering the shenanigans of its chairman who has fingers and toes in too many pies.
Prior to 2003, the standards of corporate governance for public companies in Nigeria were set by SEC which is charged with monitoring and controlling the issuance of securities in Nigeria under the Investment and Securities Act 1999; the Corporate Affairs Commission (CAC) which regulates all companies incorporated under the Companies and Allied Matters Act 1990; and the Nigerian Stock Exchange, which regulates and monitors the trading of securities in the Nigerian capital markets.

Publicly listed banks have additional requirements being under the supervision of the Central Bank of Nigeria by virtue of the CBN Act 1991 and the Banks and other Financial Institutions Act 1991. Informally, the board of directors of banks are also monitored and regulated to a lesser extent by the Nigerian Institute of Directors.

In 2003, one more layer of corporate governance compliance was added when the Code of Corporate Governance was published: a joint initiative of SEC and CAC to improve corporate governance practices because they realized ‘the need to align with corporate governance international best practices’.
With all this regulation, investors in publicly quoted companies should be safe from the kind of manipulations Cadbury and AP have undergone. With Cadbury, it was only after an internal review by the Cadbury parent group showed that its Nigerian subsidiary had overstated its account by 13.25 billion naira that an official enquiry by SEC was launched. And with AP, it was allegedly not until Otedola took out full page ads warning shareholders of stock manipulations by his close friend Dangote that the NSE realised that something fishy was going on. Maybe this cluelessness is not unrelated to the fact that Dangote is also the first Vice President of the Council of the NSE. With our reputation for corruption, who thinks it makes good sense to have majority owners of public companies also regulating the stock market?
Obviously there were a lot of weaknesses with the 2003 Code which is why a mere five years later, a committee was inaugurated to review it. One major weakness which the new Code will hopefully address is on the composition of the board. While international best practice is to have more non executive (independent) directors on a board, our 2003 Code did not mention this but merely recommended a mix of executive and non executive directors.
For instance, South Africa’s 2001 King Report on Corporate Governance which companies listed on the Johannesburg Stock Exchange must comply with, states that ‘the board should comprise a majority of non-executive directors, preferably comprising a majority of non-executive directors”. Unfortunately neither the Investment and Securities Act, nor the listing requirements of the NSE and CAMA have anything enjoining a board to have majority non-executive directors. On the composition of the board, CAMA restricts itself to excluding those who are under 18, insane and bankrupt and, without making any distinction between public and private companies, recommends that boards have at least two directors.
The contents of the new code of corporate governance have not been released, so until then Nigerian companies continue to be held to the existing watery standards of corporate governance. It is interesting that although corporate governance has been a global buzz word within business circles, our public companies (and of course private companies) seem totally oblivious of the need to incorporate best practices. When Oando Plc was listed on the Johannesburg Stock Exchange in 2005, I thought it meant Nigerian companies would start paying more attention to corporate governance because of the high standards set by other stock exchanges. Sadly this has not been the case. While in terms of business aggression and sharp tactics there would be little to differentiate Nigerians from Indians and vice versa, global companies like Infosys at least pay lip service to corporate governance best practice by providing information which proves they have more non-executive directors to ensure the independence of their board and details about their remuneration. The results of a random search of some corporate websites show that Dangote Group, Zenith Bank, and Access Bank provide no information about their corporate governance framework. GT Bank had a little more than the others but did not go far enough. Why? Is it because Nigerian shareholders are passive about enforcing their rights or because we do not have a culture of holding those in authority accountable? Between January 2005 to August 2005, the same year Cadbury’s fraud was exposed, Nigerians invested approximately Two Hundred and Forty Billion Seven Hundred and Seventy Seven Million Six Hundred and Twenty, Five Hundred and Ninety Six Naira (N240,777,620,596) in the capital market by buying shares in publicly quoted companies on the Nigerian Stock Exchange...isn’t it time to ask those we invest so much in to maintain higher standards of transparency and corporate governance?

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