Experts at Lagos Business School convened to address Nigeria’s poor corporate governance, emphasizing the need for ethical practices and transparency. The discussions highlighted the AFG Model by Professor Fabian Ajogwu to guide organizations in maintaining integrity alongside profitability. Key challenges such as corruption and inadequate regulatory frameworks were identified as obstacles to effective governance, impacting economic growth and investor confidence.
In Nigeria, the historical context of poor corporate governance continues to be a significant concern, adversely affecting businesses and investor confidence. A recent event at Lagos Business School, where leading governance experts gathered, highlights the urgent need for dialogue on corporate governance, critical for ensuring economic stability. The discussions aim to address fundamental issues hindering effective governance, which has contributed to both business failures and economic downturns.
The persistence of poor corporate governance is recognized as a fundamental challenge in Nigeria’s economy. Experts emphasize that companies often prioritize rapid growth while neglecting essential governance practices, which leads to financial mismanagement and a loss of investor trust. Thus, effective corporate governance—defined as the system by which organizations are directed and controlled—is crucial for business success.
While larger corporations may implement strong governance practices, small businesses struggle significantly, often failing within five years due to inadequate governance measures. Good governance is vital for the progress of any nation, and both elites and citizens in Nigeria understand its importance in shaping the country’s future. Challenges such as corruption, ineffective regulatory frameworks, and weak enforcement mechanisms undermine corporate governance, impacting economic growth and investor confidence.
The lack of corporate governance contributes to alarming issues like widespread corruption and financial mismanagement, which have devastated investor confidence. Notable examples include Cadbury Nigeria’s financial scandal, where profits were inflated, and the collapse of banks due to insider abuses. Furthermore, poor governance has facilitated tax evasion and fund misallocation, depriving the government of essential revenues, while investors bear substantial losses, stunting economic progress.
The adverse effects of governance failure extend to employees and stakeholders, leading to job losses and pension fund mismanagement. This environment hampers innovation and challenges businesses in securing funding. The public lecture at Lagos Business School, led by corporate governance expert Professor Fabian Ajogwu, aimed to address these concerns by unveiling the AFG Model, designed to tackle modern corporate governance challenges through a more ethical approach.
In his lecture titled ‘Balancing Power, Profit, and Purpose,’ Professor Ajogwu emphasized the importance of transparent governance as the foundation for leadership and economic sustainability. His insightful book, ‘Reflections on Corporate Governance,’ outlines practical guidance for navigating governance complexities, underscoring the need for responsible decision-making in organizations.
Dr. Peter Bamkole, Deputy Vice Chancellor of Pan-Atlantic University, reinforced that corporate governance fosters accountability and trustworthiness in businesses. Former Vice-Chancellor Professor Juan Manuel Elegido highlighted the necessity of integrating governance principles into practice, stressing that effective governance shapes corporate culture beyond mere compliance. Sola David-Borha added that the ethos of corporate governance hinges on the integrity of individuals tasked with its enforcement.
Amidst escalating uncertainties in the business landscape, the demand for effective corporate governance is more significant than ever. Ajogwu noted that governance practices must evolve alongside changing markets, emphasizing the shift from shareholder primacy to a broader stakeholder focus. This shift demands the integration of Environmental, Social, and Governance (ESG) considerations into corporate frameworks, ensuring ethical leadership and sustainable business practices.
Ajogwu proposed a progressive approach to governance, advocating for a balance between profit and social responsibility. He introduced the ‘4 Ps’ of corporate sustainability, emphasizing the need for organizations to recognize their operational impacts on society. Beyond profit, governance must align with higher purposes, fostering responsibility and maintaining trust with stakeholders.
The conversation stressed that profitability should not dominate business objectives; rather, a more holistic view of purpose should prevail. Ajogwu advocated for the rule of law as a crucial framework that strengthens governance while highlighting that combating corruption is essential to maintain ethical leadership and institutional integrity. To build a sustainable governance framework, companies must prioritize transparency and stakeholder accountability.
The discussions on corporate governance in Nigeria reflect a critical need for reform and adaptation in the face of ongoing challenges, including corruption and regulatory failures. The AFG Model proposed by Professor Ajogwu emphasizes integrating ethical considerations into corporate practices, shifting focus from mere profitability to a broader societal purpose. Effective governance, underpinned by the rule of law, is essential for enhancing transparency and accountability, ultimately fostering a more resilient business environment that promotes economic growth and investor confidence.
Original Source: www.thisdaylive.com
