Experts at the Lagos Business School emphasized the critical need for improved corporate governance in Nigeria, underscoring the role of governance in business success and societal progress. Through the introduction of the AFG Model by Professor Fabian Ajogwu, discourse focused on transitioning from profit-centric to purpose-driven governance, enhancing ethical leadership, and confronting challenges such as corruption and weak regulatory frameworks to foster investor trust and economic growth.
In Nigeria, where past corporate governance failures have led to significant business collapses, recent discussions at the Lagos Business School have drawn attention to the urgent need for improvement in this area. Various governance experts agreed on the pervasive nature of inadequate corporate governance, which often results from companies prioritizing rapid growth over essential governance practices. This neglect contributes to financial mismanagement and distrust from investors.
Corporate governance encompasses the regulations, practices, and processes that guide how a company is directed and controlled, playing a pivotal role in business success. The Corporate Finance Institute emphasizes its importance in determining organizational conduct and shaping the organizational direction. Analysts contend that larger firms tend to have better governance structures than smaller businesses, which often struggle and cease operations within five years due to governance issues.
Good governance is recognized as fundamental to national progress, and both elite and ordinary citizens in Nigeria acknowledge its significance. Challenges such as corruption, weak regulations, and poor enforcement mechanisms hinder the growth of corporate governance in the nation, negatively impacting economic development and investor confidence.
The lack of effective corporate governance has led to extensive issues within Nigerian business environments, including corruption, financial mismanagement, and declining investor trust. Numerous scandals, such as the Cadbury Nigeria incident where profit figures were manipulated, exemplify these problems. Similarly, fraudulent practices contributed to the collapse of banks like Oceanic Bank and Intercontinental Bank, driven by insider abuses and weak regulatory measures.
These governance failures also encourage practices such as tax evasion and misappropriation of corporate funds, depriving governments of critical revenue streams for infrastructure. Domestic and international investors suffer hefty losses from corporate collapses, leading to economic instability that ultimately harms stakeholders, including employees facing job insecurity and pension mismanagement.
Addressing these issues, Professor Fabian Ajogwu introduced the AFG Model during a lecture at the Lagos Business School. This model is aimed at helping organizations navigate contemporary corporate governance challenges. The event included the launch of his new book, ‘Reflections on Corporate Governance,’ which highlights corporate governance’s critical roles within organizations and society.
Dr. Peter Bamkole, Deputy Vice Chancellor at Pan-Atlantic University, emphasized how corporate governance serves as a framework for trustworthy and resilient business operations. “Corporate governance, as we all know, is the bedrock of responsible leadership, organisational success, and economic sustainability,” he stated, recommending Ajogwu’s book as a vital guide for professionals in business and law.
Professor Juan Manuel Elegido also noted that governance should extend beyond a simple checklist, urging a deeper understanding of its implications on corporate culture and ethics. “Too often, corporate governance is approached as a checklist,” he remarked. The Chairwoman of Stanbic IBTC Holdings, Sola David-Borha, emphasized that effective governance is contingent on the character of individuals involved.
Ajogwu further discussed how the modern business environment’s volatility necessitates robust corporate governance, which must evolve continuously in response to regulatory changes and public expectations. He posits that there is a transition from shareholder primacy towards considering a broader range of stakeholders.
According to Ajogwu, organizations must shift from a sole emphasis on profit to embrace a purpose-driven model, balancing financial performance with ethical corporate responsibility. “A purpose-driven governance model is increasingly relevant for businesses seeking long-term sustainability and success,” he asserted. By integrating social and environmental considerations, organizations can uphold their responsibilities to all stakeholders.
Ajogwu advocates for viewing profit as merely one element of business success, alongside social impact and corporate ethics. He underscores the rule of law’s significance, stating that it provides a framework for ethical decision-making and reinforces confidence in governance structures. Ultimately, addressing corruption requires proactive measures to enhance transparency and accountability in governance.
This recent discourse at the Lagos Business School highlights the pressing need for improved corporate governance practices in Nigeria. As underscored by experts, strategic governance extends beyond mere compliance with regulations, aiming for ethical leadership and sustainable practices. The introduction of models such as Ajogwu’s AFG Model promises a more purposeful approach to governance, vital for the long-term success and stability of businesses in the Nigerian economic landscape. Collaborative efforts to tackle systemic issues like corruption remain crucial to restoring investor trust and promoting economic growth.
Original Source: www.thisdaylive.com
