It’s becoming increasingly clear that the incoming administration would like to improve Nigeria’s operating environment in terms of integrity and corporate governance and transparency and I would invite you both to say a few words about how you see anti-bribery and anti-corruption trends and enforcement trends in the coming 12-24 months?
Oscar Onyema: The President is very positive and well received by both the local and international community. He is driving a fight against corruption and we believe that this fight needs to be institutionalized and needs to be sustainable. Using existing laws, creating new laws that would facilitate the drive to have higher standards in regards to corporate governance, with regards to anti-money laundering and the rest of it is critical. The exchange is also supporting the efforts of the government by creating a number of initiatives. The first one is the corporate governance rating system which is mandatory for all of our companies it is a written system that really tries to gauge how well good corporate governance practices are embedded in the DNA of a corporate.
There are three key aspects to this rating system. The first one is a self-assessment by the company and the second one is really to engage their stakeholders employees, vendors, regulators and other stakeholders to do independent assessments on the same metrics, and then we bring in an external stakeholder group to try to make sense of where the company has ranked itself versus where its ecosystem has ranked it. The next stage is a fiduciary awareness test which is a test that is administered to an entire board of directors, to make sure they understand their fiduciary responsibilities and that they understand the practices around good corporate governance as benchmarked against the security and exchange commission’s code of corporate governance and the listing standards of the Nigerian Stock Exchange.
So you bring all of that together and what you would like to see is that a firm has scored 70 and above – so if they do that thenthat, then they’ve passed the corporate governance rating system.
We’ve also engaged with the United Nations in the sustainable stock exchange initiative, which is really an initiative that is designed because exchange is at the heart of capitalism, for us to positively affect the corporates, the investors, regulators and other stakeholders around us, in finding sustainable ways of doing business. Just this year we released our first CSR report and next year we will make it mandatory for all of our corporates to begin to provide reports on sustainability. We think it’s really important that every corporate lets people know what they are doing to drive sustainability in the continent, as viewed from an ESG perspective, so environment, government and social issues are becoming very critical on the continent.
The final thing that we do to support good corporate governance practices is that we have really changed our rules, listing standards are benchmarked against global standards, the way we engage with our corporates is more seamless, we’ve introduced new technology such as platforms that allow corporates to report market moving information in a very secure manner. Finally we also make it very transparent as to what the compliance level of our corporates are. Are they filing their reports on time, are they meeting their listing standards, so transparency is also very critical in the way you judge whether good corporate standards are being maintained.
Mark Simmonds: What Mr. Onyema has just described is hugely important and impressive because it creates an atmosphere here in Nigeria that will give confidence to the international investor community – not just to investors who invest in the Exchange, but also who invest in other corporate entities. The leadership comes from the top both from the Stock Exchange but also from the new Nigerian president. Not just because tackling corruption is the right thing to do, but corruption of course hinders economic growth, it hinders job creation, it hinders alleviating poverty and therefore to try and change that could be a very significant driver for faster economic growth and economic development here in Nigeria.
I was very interested in your [Oscar Onyema] remarks about standards that corporates are going to have to reach and there are some straightforward things in addition to that which could be done. For example, unless a corporate reaches 70%, they shouldn’t be allowed to bid for procurement contracts from the government, therefore making sure that those corporates involved in services with the government are transparent and meet the criteria that you articulated earlier.
What sort of themes do you think external investors should be thinking about if they contemplate moving into the Nigerian market?
Oscar Onyema: The feedback we get from investors is: they want liquidity, they want transparency, they want a marketplace that delivers a level playing field. They don’t want to be trading without all the necessary information – they want to be trading with the same information that everybody else has. So for us it is very important to make sure that we have very strong regulation that is investor friendly. It is important to have diversity of products, that market investors and participants can trade in and finally it is important that we have strong liquidity in these asset classes.
