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Setting the benchmark in corporate integrity

NSE establishes Corporate Governance Index

The NSE has partnered with the CBi in an attempt to offset perceptions of Nigerian capital markets being riddled with corruption

Responding to a commonly held interpretation of Nigerian markets being infertile ground for investment, the Nigerian Stock Exchange (NSE) has, in May of this year, outlined its intentions for establishing a Corporate Governance Index. Confidence in Nigerian capital markets remains a contentious issue for investors and companies alike in that many perceive for listed companies to lack adequate disclosures, harbour corruption, and have a poor understanding of fiduciary responsibilities on the part of directors.

As a means of rectifying these issues, the NSE has entered into a partnership with the Convention on Business Integrity (CBi), hereby harvesting company data for use in developing a Corporate Governance Ranking System for listed companies. The system will score companies based upon the quality of their corporate integrity; corporate compliance; understanding of fiduciary responsibilities by their directors; and corporate reputation.

The four factors however, are not necessarily equally weighted in that corporate integrity is considered of the highest importance whereas corporate reputation bears the least significance.

Chief Executive Officer of the NSE, Oscar Onyema has since attested to corporate governance being of paramount importance to both the NSE and to the Nigerian economic climate as a whole, “ensuring a sound investment climate and maximising investor returns.

“We are proud to partner with CBi, and confidant that this will contribute to our goal of becoming the gateway to African markets,” said Onyema. Moreover signaling for the implementation of a Corporate Governance Index to be critical in achieving sustainable growth for the nation’s capital market.

Executive Director of CBi, Soji Apampa stated that the Corporate Governance Ranking project was to be funded under the World Bank supervised Siemens Integrity Initiative; the former Managing Director of SAP also disclosing that IT systems and e-learning technology would be incorporated into the project in ensuring greater a degree of efficiency and cost effectiveness.

The Humboldt-Viadrina School of Governance, Berlin has been appointed an independent observer to the proceedings, the institution reporting to related investors and expected to promote the scheme on an international basis. Though unpaid, the school intends to assess the underlying motivations for companies participating in the index for use in their wider scheme to document incentives and sanctions used in fighting corruption.

 

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