Public perception of the Nigerian Capital Market is no longer what it used to be. Confidence, which is the cutting-edge in the financial services sector, was greatly eroded in the aftermath of the stock market crash of 2008/2009.This loss of confidence was further deepened by the various infractions of listing rules by firms listed on the Stock Exchange. Regulators were also not fully alive to their statutory responsibilities. The unfortunate situation made the market’s All Share Index (ASI) decline significantly.
It is in this regard that we heartily welcome the plan by the capital market regulator, the Securities and Exchange Commission (SEC), to institute a corporate governance scorecard for all companies listed on the Stock Exchange. The move, according to the Acting Director-General, SEC, Mr. Mounir Gwarzo, is aimed at ensuring that the quoted companies uphold international best practices in their operations.
The Corporate Governance plan is expected to be inaugurated soon. There is no doubting the importance of corporate governance in both the public and private sectors of the economy. In a fast changing world that is largely driven by profitability, it has become necessary that firms listed in the capital market embrace the necessary ethics, principles and due process instituted by the market regulators.
Integrity and accountability have become key indices by which the operations of companies are judged, and not just the volume of equities traded, or their profitability. Moreover, authentic market leaders should be known by their integrity and transparency, as well as respect for the laws guiding the market.
In addition, they should be able to consciously add value to their employees, customers and shareholders. This is largely because organisations may be ruined by the greed and unscrupulous behaviour of their managers.
It is heartwarming that the SEC has deemed it necessary to inaugurate this all-important governance code. We urge the Institute of Directors (IoD) to lend their support to the success of the plan. If the listed firms imbibe the culture of good corporate governance, it will translate into better returns on investment and service delivery. This will boost confidence in the sector and the market will be sanitised.
We welcome the corporate governance scorecard and hope it will go a long way in reforming the Nigerian capital market. If properly handled, it would help to reduce insider trading and other unwholesome practices that have bedeviled the market in recent years. Let SEC continue its efforts to align Nigeria’s business standards with international best practices.
We recall that in the wake of the stock market crash of 2008/2009, about 84 stockbrokers were found guilty of various infractions for their alleged roles in the collapse of the market. Though they were pardoned on the directive of the Minister of Finance, Dr. Ngozi Okonjo-Iweala, the infractions would, perhaps, not have occurred if a good corporate governance code was in place, and operational. However, it is better late than never.
Since the performance of any nation’s economy is partly measured by the level of activities in its stock market, its vibrancy and the compliance of listed firms with the rules, regulatory agencies should continue to introduce innovative measures to strengthen the market. The Nigerian Stock Exchange should be a veritable platform for the raising of long-term financing for critical infrastructural projects. ßAll in all, full implementation of the good governance code and strict compliance by quoted firms will go a long way in ensuring its success
