Is governance a tick box exercise in Nigeria and Africa?

If not, why are business leaders treating it that way?

When asked to name governance issues affecting their businesses in Nigeria, a late 2020 survey[1] of leading C-suite women found agreement on a salutary and surprising number one issue: Lip service.

Here is what they said:

“Sometimes you have the policies and practices, but corporate governance is still treated as a tick box exercise.”

“They have the veneer there of good governance policies but not the outcomes that you would expect from that.”

“They found the means to bend it — governance policies — and bend it they did.”

“Governance tends to be quite expensive for some organizations and especially if they’re paying lip service to it, it becomes expensive lip service.”

Here’s some examples of the ways in which I heard actions did not follow the fine words of company leaders:

• Conflict of interest policies written and promoted yet flouted by the Chair inviting their relatives or friends to bid on supply contracts.
• When governance practice meant delay for the CEO getting into a new office (away from one she felt was beneath her position), she forced through faster approvals of new premises that had not been properly vetted and approved.
• Whistleblowing policies announced with great fanfare, but neither non-executive directors not board audit committee were charged with monitoring the reports, no executive functions were charged with following up, investigating and taking action on whistleblowing reports. There was no substance to the policies.
• Whistleblower sacked when her allegations were about a senior executive with connections.
• An exception was made when following good governance practice might have cost the company a contract, but then exceptions became the standard way of doing business.
• Executive Directors bullied individually by a new CEO into accepting her new way of doing things, which meant turning a blind eye to governance breaches. Most executive directors of this company left.

I discussed why practices are not actually following the promises with my Butterfly Coalition co-founder and CEO of GAIA Africa, Olatowun Candide-Johnson[2].

“It’s a good question, Pamela,” she said. “First of all, I suppose that some leaders think that it’s okay to just tick the box, just to say that: ‘Yeah, we have a compliance policy, or we have this, or we have that,” and that’s the end, but clearly this just doesn’t work. The tone has to come from the top. In everything to do with governance, it’s got to be top down because the leaders are the ones that show the example.”

Leadership from the top absolutely does matter and executive and non-executive directors have to be prepared to stand up for good governance. Non-executive director candidates should explore a company’s deep commitment to governance best practice before adding their good name to the Board; doing otherwise will tarnish her own reputation. Once on a board, should governance lapses occur or be at risk of occurring, non-executive leadership can be key.

During her former career as General Counsel and Chief Compliance Officer at an international oil and gas company in Nigeria, Olatowun led the launch of a transformational Anti-Bribery Compliance Programme.

“It was always a matter for the head of the company, the CEO, to sign the policies, to be the first to be trained, to be the first to introduce a new tool,” she recalled. “It’s got to be that way.”

Governance programmes can be expensive. One needs the policies and procedures, the tools and technology platforms, the training and auditing.

Olatowun made another point:

“Programmes are expensive because you have to have the people to run the programmes. You have to have the people to monitor the programs. But it becomes even more expensive when you don’t.”

Indeed, several of the C-suite directors and governance professionals I spoke to asserted governance was observed more in the breach than good practice until a company suffered a financial or reputational crisis forcing more substantive change on governance practice. That makes poor governance very expensive indeed.

SMEs face a special challenge to find the resources — financial and human, including leadership time — to invest in good governance even before a first product or service is sold. But for SME founder entrepreneurs, establishing good governance frameworks is as foundational as your value proposition.

“Following the right path, doing the right thing. Yes, it costs money, but it’s the only sustainable way forward,” said Olatowun.

Be a leader at the top investing in governance policies and following through with practice, enacting policies with behaviours role modelled at board level to build the solid foundations for longevity and success of your Nigerian and African business.

Learn about the Butterfly Coalition, and join other leading women being the catalyst for change.

Listen to our discussion about lip service.

Check out our upcoming webinars on other real life governance issues you face in your African business and board.

[1] Butterfly Coalition Governance Research was conducted in Q4, 2020. 76 women responded to online survey, 9 in depth, 1 hour interviews were carried out. All comments quoted here are words of 9 interviewees, senior women business leaders, executives, professionals and entrepreneurs operating in Nigeria.

[2] Article derived from the findings of the 2020 Butterfly Coalition Governance Research, and a conversation between the author and Olatowun Candide-Johnson during a Butterfly Coalition webinar on this topic.