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.
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