Feature/OPED
Dealing With Corporate Governance Challenges in Business
By Nonso Obikili
It is in the interest of the regulators whose job it is to ensure that businesses, especially publicly listed ones, maintain good corporate governance codes, as businesses tend to learn from each other. If one business gets away with sharp practices, then others try their hand at it as well.
Governance is a fundamental part of any functioning entity. The rules and systems which govern how entities function are perhaps the most fundamental thing for survival. Rules and systems that incentivise good decision making generally lead to better performing entities, while rules that incentivise bad behaviour tend to lead to breakdown. Most understand the importance of these rules and systems when we talk about governance with respect to countries, or states. In that instance, fair and enforced rules with proper checks and balances typically lead to countries that make better decisions and end up better off, whereas the opposite of that leads to countries that end up as basket cases.
However, governance rules don’t only apply to countries or states, but to businesses as well. The difference being that for businesses, instead of having presidents, national assemblies, and citizens, you have chief executive officers (CEOs), boards, and shareholders. Regardless, the principles of good governance still apply. Businesses which follow a good set of rules and systems of good behaviour tend to perform better than those that don’t.
Good corporate governance rules help ensure that businesses work in the interest of their shareholders, and don’t take actions that are not in the interest of the business. Good corporate governance rules also try to ensure that transitions within the company, such as in cases of a change of ownership structure, do not impede the normal functioning of the business. And, of course, any good system of rules has to come hand-in-hand with a system of enforcement. For businesses, such enforcement is typically done by regulators who try to make sure that rules are obeyed and penalties imposed on those who break them.
Unfortunately, as most Nigerians can attest to, sometimes the decision makers don’t always act in the interest of those who they should leading. Presidents and national assemblies don’t always act in the interest of their citizens and CEOs and board members don’t always act in the interest of their shareholders. And as you can probably guess, one common reason for this is to remain in power. Presidents want to remain in power. CEOs want to remain in power. Board members want to remain in power and sometimes act against the interest of their shareholders to do so.
One common way CEOs and board members try to stay in power is by a process called stock dilution. You see, if a board wants to act against the interests of shareholders, then one way of doing this is to change the structure of the business so that shareholders you don’t like, end up owning less of the company and having fewer voting rights consequently.
For example, if a board effectively owns 25 percent of a business and therefore has 25 percent voting rights and wants to take the business in one direction, but there are other shareholders who own maybe 40 percent who don’t particularly like that course of action, then the 40 percent can effectively block the 25 percent. A board which wants to force through its course against the will of other shareholders can create and sell more outstanding shares through private placements to people who they know will support them, thereby increasing their effective stake and simultaneously reducing the ownership shares of those shareholders who don’t support that course.
I know what you are thinking. Surely this can’t be right, and you are right. According to the rules, it shouldn’t be that easy. First, according to most corporate governance rules, boards are not allowed to organise private placements without the approval of shareholders. There are valid reasons why a company would want to sell new shares privately, of course, but those are typically only when they are desperate for new capital. But if boards need shareholder approval for this kind of dilution, then why don’t the shareholders who are at risk of their shares being diluted prevent this from happening? Well the unhappy shareholders can only prevent this kind of thing from happening if they know where the meetings are taking place. If they are systematically excluded from the general meetings, then they cannot act or vote against such actions.
This phenomenon repeats itself across many countries with weak corporate governance rules and enforcement and appears to be repeating itself here in Nigeria in the case of NEM Insurance. NEM apparently organised an annual general meeting, which some shareholders were not told about, at least not with the mandatory 21 days’ notice. At the AGM, the shareholders present approved a plan for a new private placement in which shares were to be sold at below the market value of the shares that are publicly traded on the stock exchange. NEM has been one of the better performing insurance companies in recent times, hence it was not clear if there was any emergency cash need. And of course, some shareholders appeared to have been systematically excluded from the AGM by not being notified on time, and therefore were not able to vote against such a plan. As expected, those shareholders are now up in arms fighting against what looks like a brazen attempt to dilute their stock.
This kind of shareholder infighting is obviously not good for the company. It has the potential to derail the focus that companies, especially publicly listed ones, need to run efficient operations and it casts a cloud over the long-term viability of the business. If board members can implement such an operation, then who is to say they won’t do similar things to future investors? It is in the interest of all shareholders to resolve these issues by following the properly laid out rules and guidelines and to resolve them quickly without putting the overall health of the business at risk.
It is also in the interest of the regulators whose job it is to ensure that businesses, especially publicly listed ones, maintain good corporate governance codes, as businesses tend to learn from each other. If one business gets away with sharp practices, then other try their hand at it as well. If everybody starts engaging in sharp practices, then the overall health of the system suffers. Perhaps the regulators, who are the enforcers of good corporate governance, need to take a closer look at this and set a good example.
Nonso Obikili is an economist currently roaming somewhere between Nigeria and South Africa.
The opinion expressed in this article is the author’s and do not reflect the views of his employers.
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
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