Wednesday, 28 December 2016

JIM OBAZEE SPEAKS ON HOW CORPORATE GOVERNANCE WILL ATTRACT FOREIGN INVESTORS

financial reporting council of nigeria jim obazee
Jim Obazee, CEO, Financial Reporting Council of Nigeria
Contrary to allegations that the new National Code of Corporate Governance (NCCG) is inimical to further investment, the Financial Reporting Council of Nigeria (FRCN) has defended that full compliance with the code would stimulate investment inflow in Nigeria.
Corporate governance is a means whereby society can ensure that corporations are well run, not only managed, to which investors and lenders, both domestic and foreign can confidently commit their funds. It creates safeguards against corruption and mismanagement while promoting fundamental values of a market economy in a democratic society.

Indeed, the presence of strong corporate governance standard in Nigerian firms would provide increased access to capital, thereby facilitating economic development. Investors in the nation’s capital market had recently showed dislike on the new Governance Code, prescribed by the FRCN, saying it is inimical to further investments, while also being high-handed.

“As much as we will not support company managers to be reckless, we will also not support overbearing regulators. We will support any corporate governance that will encourage investors, not one that will pull them down. And we say that this FRCN Code, which is made compulsory, will not encourage returns on investment,” they insisted.

But the FRCN Chief Executive Officer, Jim Obazee, said in an interview during the 13th yearly Financial Reporting Summit in Lagos that the Code will boost corporate governance framework in Nigerian corporate firms especially the listed entities and attract more Foreign Direct Investment (FDI) into the country.

He said: “When we took this country to the adoption of International Financial Reporting Standard, Nigeria in two consecutive years emerged the number one investment destination in Africa. China put it in their law, they legislated on it, and India incorporated it in their law 2013 because these are the things investors want to see. If they believe you are not going to protect their capital, they will not come.”

Furthermore, he argued that investors would like to invest in any jurisdiction where their fund is protected. According to him, the code would guarantee investors’ confidence that their fund is protected at any given time. “The FRC job in this period is to ensure that we are able promote confidence, to promote assurance, create an enabling environment whereby recuperative mechanism will begin to engage,” he added.

The Chairman, Steering Committee, NCCG, Victor Odiase, stressed the need for corporate and listed firms to give the Code ‘a chance’. According to him, no  investors’, whether equity or debt will invest in any country or company regarded as unstable, corrupt or lacking basic protections for investments and rights.

“Investors protection requires both law and regulations. Attracting investment requires protecting investors, and no country has a divine right to foreign direct investment. In our country today, neither the quality of law nor its enforcement can be said to be very adequate.” (Guardian)