Can we decentralize Power generation?

I read with glee that last week between 5000 -10,000 people in Lagos marched to the Lagos State Secretariat to peacefully protest the crippling lack of power in Nigeria. Just a few months ago, angry youth in Zaria had protested about electricity as well. Hopefully the manufacturing sector and private businesses will join in the clamour for something to be done about the disgraceful lack of power in the blind giant of Africa.

I read with gloom that another $4.6 billion as been allegedly spent on power generation this year – this in addition to the controversial $16B which we are told is really $3.6 billion, spent by the Obasanjo administration on the same power sector.

And yet, by all indications it is doubtful if we will get as much as 4000 megawatts by the end of 2009.

As I pointed out in a previous article – ‘PHCN get rid of your freeloaders’; apart from the all pervading selfish interests of a few Nigerians, the problem lies with the Electric Power Sector Reform Act 2005 (the ‘EPSR Act’), the 1999 Constitution and the National Electricity Regulatory Commission (NERC).

States have a right under the Section 14 of the Concurrent List of the 1999 Constitution to generate electricity for areas not covered by the national grid but Section 63(1) of the EPSR Act deliberately restricts this right by requiring State power projects to be licensed by NERC.

Why? Why is it so important for the Federal Government to maintain control over State production of electricity? Why did the Obasanjo administration scuttle the efforts of Lagos State to independently power the State? Could it be because if States take control of power generation it will become glaring to Nigerians that the lack of power that we suffer from is not for lack of solutions but for lack of will?

We know that the Federal Government does not have a monopoly over the process of power generation, so why do the executives act like it does? The Wall Street Journal recently reported that the Bonny Utility Company funded with only $5million dollars in 2001 by Shell, Total, Eni and NNPC has managed to provide its customers with power 95% of the time. According to the article: “clients get power free of charge, up to a certain limit…and now has over 8000 paying customers. The revenue from paying customers covers half of the company’s costs and has created previously impossible public service and commercial opportunities, including a doubling of operations at a hospital”. Since 2005, a similar arrangement is supposedly benefiting the forty thousand people who live in Onelga, in Delta State and more and more of these independent power projects are being executed – badly when government is involved and successfully when managed privately.

The crux: decentralize power generation in Nigeria. As the National Assembly gears up to finally tackle the issue of constitutional reform, at the top of their list should be to give States more constitutional powers. The Federal Government has had close to fifty years to get power (and many other things) right and has failed.

Instead of the ridiculous collaborative arrangement where the Federal Government, States and Local Governments are to contribute billions of dollars from their Excess Crude allocations revenue accounts to the rehabilitation of existing power plants and new power projects under the National Integrated Power Programme (NIPP), why don’t the States get a chance to manage power generation instead of the constant excuses we get from the FG, its Ministry of Power, PHCN and most recently, NERC? Are the States and Local Governments also going to be involved in awarding the contracts and appointing the people who are going to be responsible for executing the projects?

One of the reasons for federalism is to aid development, yet our Constitution has helped to cripple the States so that they are ineffective. From all indications, one of the main issues for consideration for the constitutional review is the creation of more states. Arguably at least one reason why the clamour for more States is so loud is because people are frustrated with the lack of development and think that if every hamlet was a capital and every chief a governor, development will magically appear. What we need is States with more powers – ironically since we model ourselves on the American presidential system, why are we not considering the United States Constitution, which gives the States a lot more power and independence than our States have?

Competition within the States and most critically, at least for now, within the power sector is absolutely vital for the development of Nigeria and Pastor Sam Adeyemi, the organizer of the protests in Lagos sums it up nicely: "We call on the Federal Government to break the monopoly of the Power Holding Company of Nigeria and allow private investors and state governments to generate and distribute electricity. The strategy that worked for telecommunications should be made to work for power supply."

If we amend the Constitution to allow States to generate electricity, we can also simultaneously privatize PHCN and reduce the bureaucracies of having NERC and a Federal Ministry of Power. The difference under this scenario is that Nigerians will not be held to ransom if the usual privatisation process results in the NITEL or petroleum refinery scenarios.

Like anything there are disadvantages to providing the States with more power but the benefits outweigh the risks and at this point in our history, shouldn’t we be ready to try something different? I can predict the naysayers who will talk about uneven development but this is just an excuse for mediocrity – our development is uneven, both within and outside the country. If competition between the States and within the power sector will result in more electricity for consumers, most Nigerians will support this – after all, the majority of us are not benefiting from the inefficiencies of our power sector.

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Creativity in Communication - Dora borrow a page

'Tings Dey Happen' is a story about the Niger Delta oil politics - and is set to be performed in Lagos, Calabar, Abuja, Jos and Bauchi. Ironically, it is not being sponsored by our re-branding and miscommunication guru in the Ministry of Information but by the US State Department. So much for being in control of our content.

Please go and see it and let me know what you think - I am hoping it will come and show in Boston.

To find out more Google 'Dan Hoyle + Tings dey happen'

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Are our child custody laws up-to-date?

When Asabe left her husband for her father’s house with her eighteen-month-old son, she did not realize that leaving her marriage meant she would have to give up her baby. One late afternoon, a few days after she left, her mother –in –law came to visit. After the usual pleasantries, and as she held her grandson in her arms, Asabe’s mother in law informed her that it was okay for her to leave her husband, but she could not take their son away. She walked out the door with the baby and it was many years before Asabe would see her son again.

In March, hidden away on the pages of a little known newspaper was a story of a Nigerian woman who died while struggling to retain physical possession of her four-year-old son. According to eyewitnesses, the child cried as both parents tugged at him, until the father won with one final push and walked away with the child and the woman’s life. This couple had four children, two had died and the husband had possession of the third.

How many women in Nigeria have illegally lost possession of their children just because their marriages have ended either by them or for them? How many of these cases are ever reported? And in how many of these cases, even when civil and customary laws dictate that these children are better of with their mothers, does the social structure support this?

The Matrimonial Causes Act 1970 is applicable to all child custody cases including children borne out of civil, customary and Islamic marriages and provides that in all custody matters, ‘the interests of the child shall be paramount’. This predominance of the child’s right is also echoed in the Children’s Right Act 2003, but how do we decide in a patriarchal society what the ‘interest of the child’ is, especially when that child is a minor? This becomes even harder when the Matrimonial Act is silent on what the interests of a child are, does not define the word ‘minor’ nor take into consideration the special treatment that minors need.

So who gets custody of the child where both parents are fit, willing and capable?

In Nigerian case law, we see judgments where the courts try to make the interest of the child paramount, however, what is in the best interest is sometimes subjective and personalised. In Odogwu v. Odogwu, Justice Belgore, JSC (as he then was) said, ‘the welfare of the child is not in material provisions of the home such as…food and air conditioners…it is psychologically detrimental to his (the child) welfare and ultimate happiness and psychological development if maternal care, is denied him’. In this case each time the father, who had illegally abducted the children, was asked by the lower courts to return the children, he would use the legal process to stall by filing for a stay of execution. The problems with going the legal route in child custody cases are; the time it takes, the inability of most women to afford the cost and the unenforceability of judgement. So most women just walk away with no recourse to justice or equity.

Islamic jurisprudence is more detailed in custody issues because the injunctions are relatively clear with several categories for determining minors. However, and this is a big however, the clarity ends when the different schools of interpretation are taken into consideration. Under Maliki Islamic jurisprudence, which is what majority of Nigerian Muslims adhere to, children under the age of puberty stay with their mother. In fact, female children stay with their mother until the time of the child’s marriage while male children stay with their mothers until puberty. Going further in attesting to the importance of the mother in a child’s life, even when a Muslim woman cannot be granted custody, seven variations of custody lie with her family before the father’s family comes into the equation – again something that rarely happens. Again the subjectivity of man comes into play in the male led Sharia courts, so that the reputation of these courts is that the Alkalis are often unwilling to apply the law of the Quran ‘against’ our patriarchal culture.

Apart from the culture of patriarchy, the other reasons why women lose possession of their children is because they are economically disempowered and lack access to information about their rights under either customary (Islamic) or civil law.

Unfortunately there is little under Igbo and Yoruba customary law that supports a mother’s right to her children. Amongst the Yoruba the children belong with the father and custody will usually be granted to him. According to research, within a certain group of the Yoruba, the paternal grandmother names the children, setting the stage for ‘ownership’ of the children. Ironically, in a society where all the failings of a child are ‘blamed’ on the mother, a tacit admission of the importance of the role, our society insists on separating young children from their mothers.

With thirty seven ‘ministries of women’s affairs’ and countless non governmental organisations all focused on promoting the welfare of women and children, information on child custody issues and where to go for help and advice is sadly lacking. Baobab, a women’s human rights organization, has some relevant information but this is hidden inside annual reports and there is no information on the website on the legal position on child custody. Collating custody cases and judgments is the ideal place for law, data and public policy to merge; with the judiciary and NGOs’ feeding the information into the ministries and the ministries using this data to ensure the right policy is implemented.

As usual, the Nigerian legal and political system is not set up to protect the rights of women and children. We missed the opportunity to use the Children Rights Act to close the gaps in the Matrimonial Causes Act. Now women, not only in the judiciary and legal profession, must begin taking collective and individual responsibility for protecting one of the most fundamental rights of a child – the right to a mother’s love.

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Using 'law' to prevent change

Recent debate in the media, following Dr. Chudi Nwike’s report on corruption in the civil service masks a deeper malaise. There are several things wrong with our civil service and corruption is only one of them.

Imagine you have just been appointed a minister. Nigeria is lucky to have you, a technocrat from the private sector with the relevant experience for that particular ministry. You start full of lofty but realistic plans; maybe you have even written a couple of papers on reforming this sector or worked as a consultant providing expertise to governments at home and abroad. Six months later nothing has happened. One year later still nothing has happened. Why?

Many things happen to people when they assume leadership positions but one particular and consistent thing which ensues to most well meaning Ministers in Nigeria is the ‘civil service’. Apparently a common tactic of civil servants to destabilise a new minister is to bombard them with useless information and all sorts of imaginary or exaggerated emergencies. Of course when you start running around trying to douse phantom fires and get a grip on the convoluted rules and procedures, you begin to loose focus of your goal. All this while, the most relevant information is kept from you by these career civil servants who are supposed to be there to provide administrative support in the implementation of the Ministry’s strategy.

For too long we have presumed that leadership was the major problem in Nigeria. Fortunately, a Presidency characterised by an absence of leadership is allowing us to focus on where our problems lie. We, the ‘followership’ are a clog in the wheel of development. Everyone knows a civil servant – our fathers, mothers, siblings and friends are all in the civil service…and these are the same people who are holding us back.
This problem, of course, is something we should be well acquainted with from the Udoji Commission’s recommendations in 1974, to the Onosode Report of 1981, to the Dotun Phillips-led work in 1988 and, more recently with the public service reform work of el-Rufai, we have been repeatedly told that the federal and state civil service is fundamentally politicized, corrupt, demoralized, inefficient and pays scant regard to notions of service delivery.
The common factor over the years, as soldiers come and soldiers go; PDP comes and NPN goes, is a woeful civil service remarkably resistant to change.


The Civil Service

Civil servants are traditionally considered as neutral bastions of administrative efficiency meant to provide support to governments. The idea is to maintain a level of permanence and expertise in any political system so that despite the changes in government or government ideology, stability in implementation remains. All over the world however, the civil service has become the butt of jokes about mediocrity and the use of bureaucracy in the worst sense of the word to obstinately resist change.

As bad as the civil service is generally considered to be, Nigeria must have one of the worst in the world. There are several things wrong with our civil service and corruption is only one of them. In 2005, as el-Rufai attempted to kick start the reform of the public service using the FCT Ministry as a pilot case he listed the problems of the civil service as: poor service delivery, bloated service with duplication of functions, manual processes, poor compensation, inadequate skills and absence of training. I think we can add another one: attitudinal and functional bankruptcy.

Because only attitudinal and functional bankruptcy would explain the years of civil servants systematically scuttling all attempts to make things work in Nigeria. Every time a discussion about civil service reform starts, the civil service preservation army begins its tactical manoeuvres to ensure things stay the same. They constantly raise concerns over Murtala Mohammed’s attempts in the 70s to whittle the civil service: it resulted in the corruption we see today because those who were compulsorily retired were not prepared. In other words, civil servants now help themselves to public funds because they can be retired at any time. While this may to some extent be true, a more systemic problem exists: the rules that guide civil service operation often serve to entrench the dysfunction that prevails. One case in point: the civil service rules make it almost impossible to fire a civil servant even when a minister finds the person incompetent or deliberately obstructive.

According to a member of the service ‘civil servants cannot be sacked’. ‘First the person needs to have at least four queries (which obviously cannot all happen within a week). After four queries, the issue goes to the Head of Service for an investigative and hearing process which can take months and even then the civil servant does not leave the service but is redeployed to another ministry and…even worse, you have no say on who replaces the civil servant you have just managed to get rid off.’ Section 171 of the 1999 Constitution specifically provides that only the President can appoint or remove civil servants ranking from permanent secretaries and above. An anecdote which might be more indicative to emphasise what is wrong with the civil service as opposed to being the truth is that a head chef in the staff canteen of one of the ministries which moved to Abuja was left behind in Lagos. Despite years of doing nothing in Lagos, he gradually rose to the grade of a director and was then posted to the Ministry of Justice…hopefully to the canteen.

Conclusion

The reason why a strong and efficient civil service is so important is because when we have a bad government or ‘no government’ as it seems like in the case of our current Servant Sleeper, then the business of managing the day to day governance of the country will continue. Ironically, these masters of self preservation have set up another civil service agency: the Bureau of Public Service Reform with an impressive website and a long list of achievements including the establishment of EFCC, ICPC, and budget and financial management reform. However the review of the Service in 2002 posted on the BPSR website, indicates that some of the issues were: (i) an aging population with 60% at 40 years old and above; (ii) 70% of the staff are unskilled (iii) a prevalence of “ghost” workers and (iv) 60% of Federal Government spending deployed to servicing this bureaucracy.

None of the listed achievements of reform so far have tackled these issues and Section 171(3) of the Constitution compounds the problem by insisting that the Head of the Civil Service must be appointed from the civil service pool. If over 70% of the civil servants are unskilled then what are the probabilities that the Head of Service will be fit for purpose?

While we struggle to get good leaders elected we also need to work harder to ensure these leaders have the support they need to succeed. We need to totally overhaul our civil service and rewrite the rules that underpin it.

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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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