MicroFinance banks being pivotal to the growth of the economy need to imbibe and enthrone the culture of corporate governance, as they collaborate with other stakeholders to move the country forward.
This was the position of experts during the Inaugural Corporate Governance Symposium of the Nigerian Microfinance Platform sponsored by LAPO Microfinance bank limited, Accion Microfinace bank limited and AFOS.
Experts further noted that for best corporate governance practice to thrive in any bank, there should be disclosure, transparency, accountability, integrity, responsibility and fair treatment in its day to day dealings.
During her keynote address, Sola David Borha, Managing Director and Chief Executive Officer, Stanbic IBTC Holdings stressed that institutions that endure are those that have strong corporate governance.
According to her, “Microfinance banks should institutionalise the policies and practices in their organisations. Microfinance banks can survive on its own if there are processes in place to guide the people.”
David highlighted some of the benefits accrued to corporate governance which includes investor confidence, increasing capital, good prices and earnings, sustainability and longevity.
On the other hand, she noted that consequences of bad corporate governance could result to erosion of values, reputation loss, high cost to the economy, increasing cost of compliance and high opportunity cost.
“Bad corporate governance impacts both the good and the bad and every corporate governance failure is an opportunity to strengthen corporate governance. Governance is not an end in itself but a means to an end,” she added.
Fabian Ajogwu, Principal Partner, Kenna Partners & Founder/Fellow, Society for good Corporate Governance in Nigeria said the need for corporate governance is as a result of overbearing influence of the chairman of board, weak internal control, passive shareholders, increasing level of societal awareness about the sector and ineffective management information system.
He explained that recent experiences in Nigeria has shown that in some cases, the shareholders that are most capable of curbing board and management excesses have shown an apparent unwillingness to oppose the management and boards of the company.
“The more hats the shareholders wear, the more the likelihood of conflict that could impair its ability to challenge management,” he reiterated.
He therefore advised on the need for board members to be independent members so as to ensure the company is managed in the interest of shareholders and stakeholders as well.
